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MONY Master
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Prospectus Portfolio
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Flexible Payment
Variable Annuity
Issued by
MONY Life Insurance Company of America
MONY Series Fund, Inc.
Enterprise Accumulation Trust
May 1, 1999
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PROSPECTUS
Dated May 1, 1999
Individual Flexible Payment Variable Annuity Contracts
Issued By
MONY America Variable Account A
MONY Life Insurance Company of America
MONY Life Insurance Company of America issues the flexible payment variable
annuity contract described in this prospectus. Among the contract's many terms
are:
Allocation of Purchase Payments and Surrender Value
- - You can tell us what to do with your purchase payments. You can also tell us
what to do with the Cash Value your contract may create for you resulting from
those purchase payments.
- You can tell us to place them into a separate account. That separate
account is called MONY America Variable Account A.
- If you do, you can also tell us to place your purchase payments and
Cash Values into any or all of 9 different subaccounts. Each of these
subaccounts seeks to achieve a different investment objective. The
subaccounts invest in shares of the following portfolios of the MONY
Series Fund, Inc. and The Enterprise Accumulation Trust.
- MONY Series Fund, Inc.
- Money Market Portfolio, Government Securities Portfolio, Long Term Bond
Portfolio and Intermediate Term Bond Portfolio
- The Enterprise Accumulation Trust
- Equity Income Portfolio, Managed Portfolio, Small Company Growth
Portfolio, Small Company Value Portfolio, International Growth Portfolio
and High Yield Bond Portfolio
- You can also tell us to place some or all of your purchase payments and
Cash Values into our Guaranteed Interest Account. Our account will pay you
a guaranteed interest rate annually, and we will guarantee that those
purchase payments and Cash Values will not lose any value, so long as you
leave the purchase payments and Cash Values in the Account. Purchase
payments and Cash Values you place into the Guaranteed Interest Account
become part of our assets.
Living Benefits
- Annuity Benefits
- This contract is designed to pay to you the Cash Value in periodic
installments.
- Cash Value Benefits
- You may ask for some or all of the contract's Cash Value at any time.
If you do, we may deduct a surrender charge.
Death Benefit
- - We will pay a death benefit to your beneficiary upon the death of the person
you name as annuitant before the annuity commencement date.
Fees and Charges
- - The contract allows us to deduct certain charges from the surrender value.
These charges are detailed in this prospectus.
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information dated May 1, 1999 containing additional
information about the Contracts is incorporated herein by reference. It has been
filed with the Securities and Exchange Commission and is available from the
Company without charge upon written request to the address shown on the request
form on page 42 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 42
of this prospectus.
This prospectus is not an offer to sell or a solicitation of an offer to buy the
Contracts in any jurisdiction where such may not be lawfully made.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense. This prospectus contains basic information that you should
know before investing. It comes with prospectuses for the MONY Series Fund,
Inc., Enterprise Accumulation Trust, the Guaranteed Interest Account and MONY
Life Insurance Company of America. You should read these prospectuses carefully
and keep them for future reference.
MONY Life Insurance Company of America
1740 Broadway, New York, New York 10019
1-800-487-6669
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[THIS PAGE INTENTIONALLY LEFT BLANK]
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of the Contract..................................... 1
Purpose of the Contract................................... 1
Purchase Payments and Cash Values......................... 1
MONY America Variable Account A........................... 2
Guaranteed Interest Account............................... 2
Minimum Purchase Payments................................. 2
Transfer of Cash Values................................... 2
Surrender................................................. 3
Charges and Deductions.................................... 3
Right to Return Contract Provision........................ 3
Death Benefit............................................. 3
Detailed Information About the Company
and MONY America Variable Account A....................... 9
MONY Life Insurance Company of America.................... 9
Year 2000 Issue........................................... 9
MONY America Variable Account A........................... 11
The Funds................................................... 13
MONY Series Fund Inc. .................................... 13
Enterprise Accumulation Trust............................. 14
Purchase of Portfolio Shares by MONY America Variable
Account A.............................................. 16
Guaranteed Interest Account............................... 16
Detailed Information About the Policy....................... 17
Payment and Allocation of Purchase Payments............... 17
Surrenders.................................................. 23
Death Benefit............................................... 24
Death Benefit Provided by the Contract.................... 24
Election and Contract Date of Election.................... 24
Payment of Death Benefit.................................. 25
Charges and Deductions...................................... 25
Deductions from Purchase Payments......................... 26
Charges Against Cash Value................................ 26
Annuity Provisions.......................................... 29
Annuity Payments.......................................... 29
Election and Change of Settlement Option.................. 30
Settlement Options........................................ 30
Frequency of Annuity Payments............................. 31
Additional Provisions..................................... 31
Other Provisions............................................ 32
Ownership................................................. 32
Provision Required by Section 72(s) of the Code........... 32
Provision Required by Section 401(a)(9) of the Code....... 33
Contingent Annuitant...................................... 33
Assignment................................................ 34
Change of Beneficiary..................................... 34
Substitution of Securities................................ 35
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Modification of the Contracts............................. 35
Change in Operation of MONY America Variable Account A.... 35
Voting Rights............................................... 35
Distribution of the Contracts............................... 37
Federal Tax Status.......................................... 37
Introduction.............................................. 37
Tax Treatment of the Company.............................. 37
Taxation of Annuities in General.......................... 37
Annuity Contracts Governed by Section 403(b) of the
Code................................................... 38
Retirement Plans.......................................... 39
Special Exchange Offer...................................... 40
Performance Data............................................ 40
Additional Information...................................... 41
Legal Proceedings........................................... 41
Financial Statements........................................ 41
</TABLE>
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SUMMARY OF THE CONTRACT
This summary provides you with a brief overview of the more important
aspects of your Contract. It is not intended to be complete. More detailed
information is contained in this prospectus on the pages following this Summary
and in your contract. This summary and the entire prospectus will describe the
part of the contract involving MONY America Variable Account A. The prospectus
also briefly will describe the Guaranteed Interest Account And the portfolios
offered by MONY Series Fund, Inc. and Enterprise Accumulation Trust. More
detailed information about the Guaranteed Interest Account is contained in the
prospectus attached to this prospectus and in your contract. More detailed
information about the portfolios offered by MONY Series Fund, Inc. and
Enterprise Accumulation Trust is contained in the prospectus attached to this
prospects.
DEFINITIONS
THIS PROSPECTUS CONTAINS SOME SPECIALIZED TERMS. WE HAVE DEFINED SPECIALIZED
TERMS ON THE PAGE WHERE THEY FIRST APPEAR. THE DEFINITIONS WILL APPEAR ON THE
PAGE IN A BOX LIKE THIS ONE.
PURPOSE OF THE CONTRACT
The Contract is an Individual Flexible Payment Variable Annuity Contract
(the "Contract" or "Contracts").
The Contract is designed to allow an Contractholder to make purchase
payments to the Company under the Contract. Those purchase payments are
allocated at the Contractholder's choice among the subaccounts of MONY America
Variable Account A and the Guaranteed Interest Account. Those purchase payments
can accumulate for a period of time and create Cash Values for the
Contractholder. The Contractholder can chose the length of time that such
purchase payments may accumulate. The Contractholder may chose at some point in
the future to receive annuity benefits based upon those accumulated Cash Values.
An Contractholder may use the Contract's design to accumulate Cash Values
for various purposes including retirement or to supplement other retirement
programs. Some of these retirement programs (the "Qualified Plans") may qualify
for federal income tax advantages available under Sections 401, 403, 408, and
457 of the Internal Revenue Code (the "Code").
QUALIFIED PLANS -- Retirement plans that receive favorable tax treatment under
Section 401, 403, 408 or 457 of the Internal Revenue Code.
QUALIFIED CONTRACTS -- Contracts issued under Qualified Plans.
The Contract is also designed to allow the Contractholder to request
payments of part or all of the accumulated Cash Values before the Contractholder
begins to receive annuity benefits. This payment may result in the imposition of
a surrender charge. It may also be subject to income and other taxes.
PURCHASE PAYMENTS AND CASH VALUES
The purchase payments you make for the Contract are received by the
Company. Currently those purchase payments are not subject to taxes imposed by
the United States Government or any state or local government.
You may allocate your purchase payments to one or more of the subaccounts
of MONY America Variable Account A that are available under the Contract and/or
to the Guaranteed Interest Account. The purchase payments you allocate among the
various subaccounts of MONY America Variable Account A may increase or decrease
in value on any day depending on the investment experience of the subaccounts
you select. There is no guarantee that the value of the purchase payments you
allocate to any of the subaccounts of
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MONY America Variable Account A will increase or that the purchase payments you
make will not lose value.
Purchase payments you allocate to the Guaranteed Interest Account will be
credited with interest at a rate determined by the Company. That rate will not
be less than 3.5%.
MONY AMERICA VARIABLE ACCOUNT A
MONY America Variable Account A is a separate investment account of MONY
Life Insurance Company of America (the "Company"). MONY America Variable Account
A's assets are owned by the Company, but are not chargeable with liabilities
arising from any other business the Company conducts.
The subaccounts of MONY America Variable Account A invest in shares of MONY
Series Fund, Inc. and The Enterprise Accumulation Trust (collectively called the
"Funds") at their net asset value. (See "The Funds" at page 13). Contractholder
bear the entire investment risk for all amounts allocated to MONY America
Variable Account A subaccounts.
CONTRACTHOLDERS -- The person so designated in the application. If a Contract
has been absolutely assigned, the assignee becomes the Contractholder. A
collateral assignee is not the Contractholder.
PURCHASE PAYMENT (PAYMENT) -- An amount paid to the Company by the
Contractholder or on the Contractholder's behalf as consideration for the
benefits provided by the Contract.
GUARANTEED INTEREST ACCOUNT
The Guaranteed Interest Account is part of the Company's general account.
It consists of all the Company's assets other than assets allocated to
segregated investment accounts of the Company. 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 16.)
CASH VALUE -- The dollar value as of any Valuation Date of all amounts
accumulated under the
Contract.
VALUATION DATE -- Each day that the New York Stock Exchange is open for trading.
MINIMUM PURCHASE PAYMENTS
The minimum purchase payment for individuals varies depending upon the
purchaser of the contract and the method of paying the purchase payments. See
"Payment and Allocation of Payment on page 17.
Additional purchase payments of at least $100 may be made at any time.
However, for certain automatic payment plans, the smallest additional payment is
$50. (See "Issuance of the Contract" at page 17.) The Company may change any of
these requirements in the future.
TRANSFER OF CASH VALUES
You may transfer Cash Value among the subaccounts and to or from the
Guaranteed Interest Account. Transfers may be made by telephone if the proper
form has been completed, signed, and received by the Company at its Operations
Center located at 1 MONY Plaza, Syracuse, New York 13202. See "Transfers", page
21.
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SURRENDER
You may surrender all or part of the Contract at any time and receive its
surrender value while the annuitant is alive prior to the annuity commencement
date. We may impose a surrender charge. The amounts you receive upon surrender
may be subject to income taxes. (See "Federal Tax Status" at page 37.)
CHARGES AND DEDUCTIONS
The Contract provides for the deduction of various charges and expenses
from the Cash Value of the Contract. These deductions are summarized in the
table on pages 25 and discussed in greater detail beginning on page 26.
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.
RIGHT TO RETURN CONTRACT PROVISION
You have the right to examine the Contract when you receive it. You may
return the Contract for any reason within ten days from the day you receive it.
You will receive a full refund of the purchase payments received by the Company.
During the Free Look Period, purchase payments will be retained in the Money
Market Subaccount of Variable Account A.
DEATH BENEFIT
If the Annuitant (and the Contingent Annuitant, if any) dies before the
date the annuity payments start, the Company will pay a death benefit to the
Beneficiary. Under certain circumstances, an Enhanced Death Benefit may be
payable. If the Annuitant dies after annuity payments start, no death benefit is
payable except as may be payable under the settlement option selected. (See
"Death Benefit" at page 24.)
ANNUITANT -- The person upon whose continuation of life any annuity payment
depends.
CONTINGENT ANNUITANT -- The party designated by the Contractholder to become the
Annuitant, subject to certain conditions, on the death of the Annuitant.
BENEFICIARY -- The party entitled to receive benefits payable at the death of
the Annuitant or (if applicable) the Contingent Annuitant.
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MONY LIFE INSURANCE COMPANY OF AMERICA
MONY AMERICA VARIABLE ACCOUNT A
TABLE OF FEES FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
CONTRACTHOLDER TRANSACTION EXPENSES:
Maximum Deferred Sales Load (Surrender Charge)
(as a percentage of amount surrendered)................... 7%*
MAXIMUM ANNUAL CONTRACT CHARGE.............................. $ 30**
MAXIMUM TRANSFER CHARGE..................................... $ 25**
SEPARATE ACCOUNT ANNUAL EXPENSES:
Maximum Mortality and Expense Risk Fees..................... 1.25%***
Total Separate Account Annual Expenses...................... 1.25%***
ANNUAL EXPENSES OF MONY SERIES FUND, INC. AND THE ENTERPRISE
ACCUMULATION TRUST:
</TABLE>
MONY SERIES FUND, INC.
ANNUAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1998
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
GOVERNMENT
INTERMEDIATE TERM LONG TERM SECURITIES MONEY MARKET
BOND PORTFOLIO BOND PORTFOLIO PORTFOLIO PORTFOLIO
----------------- -------------- ---------- ------------
<S> <C> <C> <C> <C>
Expenses (After Reimbursement)........... .11%(1) .07%(1) .13%(1) .05%(1)
Management Fees.......................... .50% .50% .50% .40%
Total Annual Expenses.................... .61% .57% .63% .45%
</TABLE>
ENTERPRISE ACCUMULATION TRUST
ANNUAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1998
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
SMALL+ HIGH
COMPANY INTERNATIONAL YIELD
EQUITY VALUE MANAGED GROWTH BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Expenses.................................... .05%(2) .05%(2) .04%(2) .37%(2) .12%(2)
Management Fees............................. .78% .80% .72% .85% .60%
Total Accumulation Trust Annual Expenses
After Reimbursement....................... .83% .85% .76% 1.22% .72%
</TABLE>
- ---------------
* The Surrender Charge percentage, which reduces to zero as shown in the table
on page 28, is determined by the number of Contract Anniversaries since a
purchase payment was received. The Surrender Charge may be reduced under
certain circumstances which include reduction in order to guarantee that
certain amounts may be received free of surrender charge. See "Charges
against Cash Value -- Guaranteed Free Surrender Amount" at page 29.
** For Non-Qualified Contracts the Annual Contract Charge is currently $30. For
Qualified Contracts (other than those issued for IRA and SEP-IRA) the Annual
Contract Charge is $15 per contract year. However, the Company may in the
future change the amount of the charge to an amount not exceeding $50 per
contract year. See "Charges Against Cash Value -- Annual Contract Charge",
at page 26. The Transfer Charge currently is $0. However, the Company has
reserved the right to impose a charge for each transfer, which will not
exceed $25. See "Charges Against Cash Value -- Transfer Charge" at page 27.
*** The Mortality and Expense Risk charge is deducted daily equivalent to a
current annual rate of 1.25 percent from the value of the net assets of the
Separate Account.
+ 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.
(1) Expenses also include custodial credit percentages as follows: Intermediate
Term Bond -- .009%; Long Term Bond -- .005%; Government Securities -- .012%;
Money Market -- .004%. Absent custodial credits, expenses would have been as
follows: Intermediate Term Bond -- .62%, Long Term Bond -- .58%, Government
Securities -- .64% and Money Market -- .45%.
(2) Reflects expense reimbursements in effect since May 1, 1996. Absent these
expense reimbursements, expenses would have been as follows: Equity -- .83%;
Small Company Value -- .85%; Managed -- .76%; International Growth -- 1.22%;
and High Yield Bond -- .72%. The Equity, Small Company Value, and Managed
Portfolio reimbursements relate to mutual fund accounting expense.
4
<PAGE> 10
The purpose of the Table of Fees beginning on page 5 is to assist the
Contractholder in understanding the various costs and expenses that the
Contractholder will bear, directly or indirectly. The table reflects the
expenses of the separate account as well as of MONY Series Fund, Inc. and
Enterprise Accumulation Trust. MONY Series Fund, Inc. and the 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 25 of this Prospectus. The expenses
borne by the MONY Series Fund, Inc. are explained under the caption "Management
of the Fund" at page 15 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
Company Value, 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 "Portfolio
Management" at page 19 of the accompanying prospectus for the Accumulation
Trust. Effective on and after May 1, 1996 and at least through April 1, 1999, as
a part of the increase in investment advisory fees, the investment adviser has
agreed to reimburse the Accumulation Trust for expenses which exceed .95% of the
average daily net assets of the Equity, Small Company Value, and Managed
Portfolios of the 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...................................................... $85 $121 $160 $249
Small Company Value......................................... $85 $122 $161 $251
Managed..................................................... $84 $119 $157 $242
International Growth........................................ $89 $133 $180 $289
High Yield Bond............................................. $84 $118 $155 $238
Intermediate Term Bond...................................... $83 $115 $149 $227
Long Term Bond.............................................. $82 $113 $147 $223
Government Securities....................................... $83 $115 $150 $230
Money Market................................................ $81 $109 $141 $209
</TABLE>
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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:
<TABLE>
<CAPTION>
AFTER AFTER AFTER AFTER
SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity...................................................... $85 $121 $116 $249
Small Company Value......................................... $85 $122 $117 $251
Managed..................................................... $84 $119 $112 $242
International Growth........................................ $89 $133 $136 $289
High Yield Bond............................................. $84 $118 $110 $238
Intermediate Term Bond...................................... $83 $115 $105 $227
Long Term Bond.............................................. $82 $113 $103 $223
Government Securities....................................... $83 $115 $106 $230
Money Market................................................ $81 $109 $ 96 $209
</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...................................................... $22 $68 $116 $249
Small Company Value......................................... $22 $68 $117 $251
Managed..................................................... $21 $65 $112 $242
International Growth........................................ $26 $79 $136 $289
High Yield Bond............................................. $21 $64 $110 $238
Intermediate Term Bond...................................... $20 $61 $105 $227
Long Term Bond.............................................. $19 $60 $103 $223
Government Securities....................................... $20 $62 $106 $230
Money Market................................................ $18 $56 $ 96 $209
</TABLE>
The examples above should not be considered a representation of past or
future expenses, and actual expenses may be greater or lesser than those shown.
All Variable Account expenses as well as portfolio company (MONY Series Fund,
Inc. and the Enterprise 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.
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CONDENSED FINANCIAL INFORMATION
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY AMERICA VARIABLE ACCOUNT A
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
UNIT VALUE
---------------------
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
SUBACCOUNT INCEPTION* 1989 1990 1991 1992 1993 1994 1995
---------- ---------- --------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity....................... $10.00 $12.29 $11.87 $15.40 $17.94 $19.11 $19.60 $26.82
Small Company Value.......... 10.00 11.91 10.61 15.53 18.64 22.01 21.73 24.11
Intermediate Term Bond....... 10.00 11.35 11.99 13.66 14.43 15.37 14.95 16.95
Long Term Bond............... 10.00 11.74 12.32 14.32 15.39 17.36 16.09 20.68
Managed...................... 10.00 13.61 12.96 18.71 21.93 23.91 24.22 35.17
Money Market................. 10.00 11.35 12.10 12.64 12.91 13.11 13.45 14.03
Government Securities........ 10.00 -- -- -- -- -- 10.04 11.00
International Growth......... 10.00 -- -- -- -- -- 9.91 11.22
High Yield Bond.............. 10.00 -- -- -- -- -- 10.05 11.54
<CAPTION>
DEC. 31, DEC. 31, DEC. 31,
SUBACCOUNT 1996 1997 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C>
Equity....................... $33.18 $41.22 $44.74
Small Company Value.......... 26.49 37.77 40.90
Intermediate Term Bond....... 17.36 18.47 19.60
Long Term Bond............... 20.36 22.81 24.81
Managed...................... 42.90 52.75 56.24
Money Market................. 14.57 15.15 15.75
Government Securities........ 11.25 11.91 12.57
International Growth......... 12.48 12.98 14.72
High Yield Bond.............. 12.88 14.42 14.76
</TABLE>
<TABLE>
<CAPTION>
UNITS OUTSTANDING
---------------------------------
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
SUBACCOUNT 1989 1990 1991 1992 1993 1994 1995
---------- --------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity.................................... 406,388 724,942 932,249 1,556,288 2,956,822 3,865,965 5,426,511
Small Company Value....................... 159,416 205,615 549,782 1,476,360 4,249,653 5,924,266 6,055,472
Intermediate Term Bond.................... 147,723 224,861 335,862 673,719 1,673,790 1,753,781 1,806,518
Long Term Bond............................ 188,093 409,738 618,029 1,193,954 2,673,790 2,245,807 2,477,643
Managed................................... 1,178,484 2,732,585 4,291,015 9,199,182 18,964,250 24,924,610 31,540,233
Money Market.............................. 700,400 1,324,393 1,570,127 2,718,704 3,698,103 5,304,884 6,504,679
Government Securities..................... -- -- -- -- -- 17,347 679,711
International Growth...................... -- -- -- -- -- 208,202 1,456,982
High Yield Bond........................... -- -- -- -- -- 6,870 1,194,315
<CAPTION>
DEC. 31, DEC. 31, DEC. 31,
SUBACCOUNT 1996 1997 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C>
Equity.................................... 8,212,227 10,706,757 11,629,793
Small Company Value....................... 6,346,453 8,401,211 8,392,405
Intermediate Term Bond.................... 1,916,050 1,941,792 2,414,529
Long Term Bond............................ 2,506,531 2,645,732 4,000,596
Managed................................... 39,371,381 43,843,754 41,556,499
Money Market.............................. 8,278,977 8,585,010 18,280,159
Government Securities..................... 1,269,214 1,761,542 3,591,602
International Growth...................... 3,610,923 5,021,078 4,954,694
High Yield Bond........................... 2,361,710 4,081,656 5,868,866
</TABLE>
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* MONY America Variable Account A commenced operations on November 25, 1987. The
Intermediate Term Bond, Long Term Bond, and Money Market Subaccounts became
available for allocation on that date, however, only the Money Market
Subaccount had operations in 1987. The Equity, Small Company Value, and
Managed Subaccounts became available for allocation on August 1, 1988. The
Government Securities, International Growth, and High Yield Bond Subaccounts
first became available for allocation on November 16, 1994.
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The following chart may help you understand how the contract works:
[MONY GRAPH]
8
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DETAILED INFORMATION ABOUT THE COMPANY
AND MONY AMERICA VARIABLE ACCOUNT A
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY Life Insurance Company of America issues the policy. In this
prospectus MONY Life Insurance Company of America is called the "Company". 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, Puerto Rico, and the U.S.
Virgin Islands.
The Company is a wholly owned subsidiary of MONY Life Insurance Company
("MONY"). The principal office of the Company is located at 1740 Broadway, New
York, New York 10019. MONY was organized as a mutual life insurance company
under the laws of the State of New York in 1842 as The Mutual Life Insurance
Company of New York. In 1998, The Mutual Life Insurance Company of New York
converted to a stock company through demutualization and was renamed MONY Life
Insurance Company. The demutualization does not have any material effect on the
Company, MONY America Variable Account A, or the contract.
At May 1, 1999, the rating assigned to the Company by A.M. Best Company,
Inc., an independent insurance company rating organization, was
A -- (Excellent). This rating is based upon an analysis of financial condition
and operating performance through the end of 1997. 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 policies.
YEAR 2000 ISSUE
The Year 2000 issue is the result of widespread use of computer programs
which use two digits (rather than four) to define a year. By use of a two-digit
field, the industry avoided the greater cost of additional mainframe capacity.
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.
State of Readiness
The Company has a service agreement with MONY whereby MONY provides
services and equipment including computer and information systems to the Company
to conduct its business.
In 1996, the Company initiated in conjunction with MONY and its affiliates
(hereafter collectively referred to as "MONY and its subsidiaries") a formal
Year 2000 Project to resolve the Year 2000 issue. The scope of the Project was
identified, and funding was established. In early 1997, MONY and its
subsidiaries retained Command Systems, Inc., and Keane, Inc. to assist the
Company in bringing the Company's computer and information systems into Year
2000 compliance. MONY and its subsidiaries' overall goal for information
technology ("IT") related items is to have business-critical hardware and
software compliant by December 31, 1998, with additional testing and enterprise
end-to-end testing occurring in 1999. MONY and its subsidiaries have also
retained Technology Resource Solutions to assist in the evaluation of Year 2000
issues affecting the Company's non-IT systems in facilities and equipment which
may contain date logic in embedded chips. MONY's overall goal is to have all
non-IT systems compliant by mid-1999.
The scope of the Project includes:
- ensuring the compliance of all applications, operating systems and
hardware on mainframe, PC and LAN platforms;
- ensuring the compliance of voice and data network software and hardware;
addressing issues related to non-IT systems in buildings, facilities and
equipment which may contain date logic in embedded chips; and
- addressing the compliance of key vendors and other third parties.
9
<PAGE> 15
The phases of the Project are:
(1) inventorying Year 2000 items and assigning priorities;
(2) assessing the Year 2000 compliance of items;
(3) remediating or replacing items that are determined not to be Year
2000 compliant;
(4) testing items for Year 2000 compliance; and
(5) designing and implementing Year 2000 contingency and business
continuity plans.
To determine that all IT systems (whether internally developed or
purchased) are Year 2000 compliant, each system is tested using a standard
testing methodology which includes unit testing, baseline testing, and future
date testing. Future date testing includes critical dates near the end of 1999
and into the Year 2000, including leap year testing.
The inventory and assessment phases of the Project were completed prior to
mid 1998. At December 31, 1998, all of MONY and its subsidiaries' application
systems had been remediated, and current date tested. In addition, approximately
94% of MONY and its subsidiaries' applications had been future date tested, with
future date testing for the remaining 6% scheduled for completion by mid-1999.
New implemented applications and new releases of software packages will be
tested in 1999 as part of the implementation process. Approximately 87% of the
operating systems, systems software, and hardware for mainframe, PC and LAN
platforms were deemed compliant based on information supplied by vendors
verbally, in writing, or on the vendor's Internet site. Of the IT business
critical items, essentially all were compliant and tested by December 31, 1998.
The remaining items will be resolved and tested in the first quarter of 1999.
Approximately 50% of non-IT business critical items had been remediated as of
December 31, 1998. Ongoing testing for Year 2000 compliance will continue in
1999, and is expected to be completed by mid-1999.
As part of the Project, significant service providers, vendors, suppliers,
and other third parties that are believed to be critical to business operations
after January 1, 2000, have been identified and steps are being undertaken in an
attempt to reasonably ascertain their stage of Year 2000 readiness through
questionnaires, interviews, on-site visits, and other available means.
Costs
The estimated total cost of the Year 2000 Project is approximately $2.0
million. The total amount expended on the Project through December 31, 1998 was
$1.8 million. The estimated future cost of completing the Year 2000 Project is
estimated to be approximately $0.2 million. These amounts include costs
associated with the current development of contingency plans.
Risks
The Company believes that completed and planned modifications and
conversions of its internal systems and equipment will allow it to be Year 2000
compliant in a timely manner. There can be no assurance, however, that the
Company's internal systems or equipment or those third parties on which the
Company relies will be Year 2000 compliant in a timely manner or that the
Company's or third parties' contingency plans will mitigate the effects of any
noncompliance. The failure of the systems or equipment of the Company or third
parties (which the Company believes is the most reasonable likely worst case
scenario) could affect the distribution and sale of life insurance, annuity and
investment products and could have a material effect on the Company's financial
position and results of operations.
Contingency Plans
MONY and its subsidiaries have retained outside consultants to assist in
the development of Business Continuity Plans, which includes identification of
third party service providers, information systems, equip-
10
<PAGE> 16
ment, facilities, and other items which are mission critical to the operation of
the business. In conjunction with this effort, the Company is developing a Year
2000 Contingency Plan to address failures due to the Year 2000 problem of third
parties and other items, which are critical to the ongoing operation of the
business. The Contingency Plan includes the performance of alternate processing
as well as consideration for changing third party service providers, vendors,
and suppliers if necessary. The scheduled date for completion of the Contingency
Plan is mid 1999. The Company believes that due to the pervasive nature of
potential Year 2000 issues, the contingency planning process is an ongoing one
that will require further modifications as the Company obtains additional
information regarding the status of third party Year 2000 readiness.
MONY Series Fund and the Accumulation Trust have reviewed their investment
advisers and other suppliers of services with respect to the Year 2000 issue.
MONY Series Fund and the Accumulation Trust prospectuses, which are included in
the Prospectus Portfolio, contain the results of these reviews. See MONY Series
Fund prospectus at page 15. Accumulation Trust prospectus at page 13.
MONY AMERICA VARIABLE ACCOUNT A
MONY America Variable Account A is a separate investment account of the
Company. Presently, only purchase payments for individual flexible payment
variable annuity contracts are permitted to be allocated to MONY America
Variable Account A. The assets in MONY America Variable Account A are kept
separate from the general Account Assets and other separate accounts of the
Company.
The Company owns the assets in MONY America Variable Account A. The Company
is required to keep assets in MONY America Variable Account A that equal the
total market value of the contract liabilities funded by MONY America Variable
Account A. Realized or unrealized income gains or losses of MONY America
Variable Account A are credited or charged against MONY America Variable Account
A assets without regard to the other income, gains or losses of the Company.
Reserves and other liabilities under the contracts are assets of MONY America
Variable Account A. MONY America Variable Account A assets are not chargeable
with liabilities of the Company's other businesses. All obligations under the
contract are general corporate obligations of the Company. The Company may
accumulate in MONY America Variable Account A proceeds from various contract
charges applicable to those assets. From time to time, any such additional
assets may be transferred in cash to the Company's General Account.
MONY America Variable Account A was authorized by the Board of Directors of
the Company and established under Arizona law on March 27, 1987. MONY America
Variable Account A is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 (the "1940 Act") as a unit
investment trust. A unit investment trust is a type of investment company. This
does not involve any supervision by the SEC or the management or investment
policies or practices of MONY America Variable Account A. For state law
purposes, MONY America Variable Account A is treated as a part or division of
the Company.
MONY America Variable Account A is divided into subdivisions called
subaccount. There are currently 9 subaccounts available to you. Each subaccount
invests only in shares of a designated portfolio of MONY Series Fund, Inc or the
Enterprise Accumulation Trust. For example, the Long Term Bond Subaccount
invests solely in shares of the MONY Series Fund, Inc. Long Term Bond Portfolio.
These portfolios serve only as the underlying investment for variable annuity
and variable life insurance contracts issued through separate accounts of the
Company or other life insurance companies. The portfolios may also be available
to certain pension accounts. The portfolios are not available directly to
individual investors. In the future, the Company may establish additional
subaccounts of MONY America Variable Account A. Future subaccounts may invest in
other portfolios of the Funds or in other securities. MONY Series Fund, Inc. has
a total of seven portfolios. Only four of the seven portfolios are available to
you.
11
<PAGE> 17
The following table lists the subaccounts of MONY America Variable Account
A that are available to you, their respective investment objectives, and which
Fund portfolio shares are purchased:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
SUBACCOUNT AND DESIGNATED PORTFOLIO INVESTMENT OBJECTIVE
--------------------------------------------------------------------------------------------
<S> <C>
THE MONEY MARKET SUBACCOUNT Maximum current income consistent with
preservation of capital and maintenance of
This subaccount purchases shares of the liquidity. Tries to achieve objective by
MONY Series Fund, Inc. Money Market investing in money market instruments.
Portfolio.
--------------------------------------------------------------------------------------------
THE GOVERNMENT SECURITIES SUBACCOUNT Maximum current income over the
intermediate term consistent with the
This subaccount purchases shares of the preservation of capital. Tries to achieve
MONY Series Fund, Inc. Government objective through investment in
Securities Portfolio. highly-rated debt securities, U.S.
government obligations, and money market
instruments, with a dollar weighted
average life of up to ten years when
purchased.
--------------------------------------------------------------------------------------------
THE INTERMEDIATE TERM BOND SUBACCOUNT Maximize income over the intermediate term
consistent with the preservation of
This subaccount purchases shares of the capital. Seeks to achieve objective by
MONY Series Fund, Inc. Intermediate Term investing in highly rated debt securities,
Bond Portfolio. U.S. Government obligations, and money
market instruments, together having a
dollar-weighted average life of between 4
and 8 years.
--------------------------------------------------------------------------------------------
THE LONG TERM BOND SUBACCOUNT Maximize income over the longer term
consistent with preservation of capital.
This subaccount purchases shares of the Seeks to achieve objective by investing in
MONY Series Fund, Inc. Long Term Bond highly-rated debt securities, U.S.
Portfolio. Government obligations, and money market
instruments, together having a
dollar-weighted average life of more than
8 years.
--------------------------------------------------------------------------------------------
THE EQUITY SUBACCOUNT Long-term capital appreciation. Seeks to
achieve this objective by investing in a
This subaccount purchases shares of the diversified portfolio of primarily equity
Enterprise Accumulation Trust Equity securities selected on the basis of a
Portfolio. value-oriented approach to investing.
--------------------------------------------------------------------------------------------
THE MANAGED SUBACCOUNT Provide growth of capital over time. Seeks
to achieve investment objective by
This subaccount purchases shares of the investing in a portfolio consisting of
Enterprise Accumulation Trust Managed common stocks, bonds and cash equivalents,
Portfolio. the percentage of which vary over time
based on the investment manager assessment
of the relative investment values.
--------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 18
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
SUBACCOUNT AND DESIGNATED PORTFOLIO INVESTMENT OBJECTIVE
--------------------------------------------------------------------------------------------
<S> <C>
THE SMALL COMPANY VALUE SUBACCOUNT Capital appreciation. Pursues its
investment objective by investing in a
This subaccount purchases shares of the diversified portfolio of primarily equity
Enterprise Accumulation Trust Small securities of companies with market
Company Value Portfolio. capitalization of under $1 billion.
--------------------------------------------------------------------------------------------
THE INTERNATIONAL GROWTH SUBACCOUNT Capital appreciation. Pursues its
investment objective primarily through a
This subaccount purchases shares of the diversified portfolio of non-United States
Enterprise Accumulation Trust equity securities.
International Growth Portfolio.
--------------------------------------------------------------------------------------------
THE HIGH YIELD BOND SUBACCOUNT Maximum current income. Seeks to meet its
investment objective primarily by
This subaccount purchases shares of the investing in debt securities that are
Enterprise Accumulation Trust High Yield rated Ba or lower by Moody's Investors
Bond Portfolio. Service, Inc. or BB or lower by Standard &
Poor's Corporation. These lower rated
bonds are 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 has special risks and
therefore, may not be suitable for all
investors. Investors should carefully
assess the risks associated with
allocating payments to this subaccount.
--------------------------------------------------------------------------------------------
</TABLE>
THE FUNDS
Each available subaccount of MONY America Variable Account A will invest
only in the shares of the designated portfolio of MONY Series Fund, Inc. or The
Enterprise Accumulation Trust (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. The Funds,
or either of them, may withdraw from sale any or all the respective portfolios
as allowed by applicable law.
MONY SERIES FUND, INC.
Only shares of four of the seven portfolios of MONY Series Fund, Inc. can
be purchased by a subaccount available to you. Each of the portfolios has
different investment objectives and policies. The Company is a registered
investment adviser under the Investment Advisers Act of 1940. The Company serves
as investment adviser to MONY Series Fund, Inc. It paid all expenses associated
with organizing MONY Series Fund, Inc. when the Fund was organized in 1985.
Those expenses included the costs of the initial registration of its securities.
The Company, as investment adviser, currently pays the compensation of the
Fund's directors, officers, and employees who are affiliated in some way with
the Company. MONY Series Fund, Inc. pays for all other expenses including, for
example, the calculation of the net asset value of the portfolios. To carry out
its duties as an investment adviser, the Company has entered into a Services
Agreement with MONY to provide personnel, equipment, facilities and other
services. As the investment adviser to MONY Series Fund, Inc., the Company
receives a daily investment advisory fee for each portfolio (see chart below).
Fees are deducted daily and paid to the Company monthly.
13
<PAGE> 19
The following table describes the portfolios available and their respective
investment advisers and the investment advisory fees:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
PORTFOLIO AND INVESTMENT ADVISER INVESTMENT ADVISORY FEE
- --------------------------------------------------------------------------------------------
<S> <C>
GOVERNMENT SECURITIES PORTFOLIO Annual rate of 0.50% of the first $400
million, 0.35% of the next $400 million, and
MONY Life Insurance Company of America is 0.30% in excess of $800 million of the
the Investment Adviser portfolio's aggregate average daily net
assets.
- --------------------------------------------------------------------------------------------
LONG TERM BOND PORTFOLIO Annual rate of 0.50% of the first $400
million, 0.35% of the next $400 million, and
MONY Life Insurance Company of America is 0.30% in excess of $800 million of the
the Investment Adviser. portfolio's aggregate average daily net
assets.
- --------------------------------------------------------------------------------------------
INTERMEDIATE TERM BOND PORTFOLIO Annual rate of 0.50% of the first $400
million, 0.35% of the next $400 million, and
MONY Life Insurance Company of America is 0.30% in excess of $800 million of the
the Investment Adviser. portfolio's aggregate average daily net
assets.
- --------------------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO Annual rate of 0.40% of the first $400
million, 0.35% of the next $400 million, and
MONY Life Insurance Company of America is 0.30% of assets in excess of $800 million of
the Investment Adviser. the portfolio's aggregate average daily net
assets.
- --------------------------------------------------------------------------------------------
</TABLE>
ENTERPRISE ACCUMULATION TRUST
Enterprise Accumulation Trust has ten portfolios, the shares of which can
all be purchased by the subaccounts available to you. Enterprise Capital
Management, Inc. ("Enterprise Capital"), a wholly owned subsidiary of MONY Life
Insurance Company, is the investment adviser of Enterprise Accumulation Trust.
Enterprise Capital is responsible for the overall management of the portfolios,
including meeting the investment objectives and policies of the portfolios.
Enterprise Capital contracts with sub-investment advisers to assist in managing
the portfolios. For information about the sub-advisers for each portfolio, see
page 19 of the Enterprise Accumulation Trust prospectus which accompanies this
prospectus. Enterprise Accumulation Trust pays an investment advisory fee to
Enterprise Capital which in turn pays the sub-investment advisers. Fees are
deducted daily and paid to Enterprise Capital on a monthly basis. The
sub-investment adviser and daily investment advisory fees and sub-investment
advisory fees for each portfolio are shown in the table below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PORTFOLIO AND SUB-INVESTMENT ADVISER INVESTMENT ADVISER FEE SUB-INVESTMENT ADVISER FEE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EQUITY PORTFOLIO Annual rate of 0.80% of the Annual rate of 0.40% up to
first $400 million, 0.75% of $1 billion, and 0.30% in
OpCap Advisors (subsidiary of the next $400 million and excess of $1 billion of the
Oppenheimer Capital) is the 0.70% in excess of $800 portfolio's aggregate
sub-investment adviser. million of the portfolio's average daily net assets.
aggregate average daily net
assets.
- ------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 20
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PORTFOLIO AND SUB-INVESTMENT ADVISER INVESTMENT ADVISER FEE SUB-INVESTMENT ADVISER FEE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANAGED PORTFOLIO Annual rate of 0.80% of the Annual rate of 0.40% up to
first $400 million, 0.75% of $1 billion, 0.30% in excess
OpCap Advisors (subsidiary of the next $400 million and of $1 billion, and 0.25% in
Oppenheimer Capital) is the 0.70% in excess of $800 excess of $2 billion of the
sub-investment adviser. million of the portfolio's portfolio's aggregate
aggregate average daily net average daily net assets.
assets.
- ------------------------------------------------------------------------------------------------------
SMALL COMPANY VALUE PORTFOLIO Annual rate of 0.80% of the Annual rate of 0.40% of the
portfolio's aggregate first $1 billion and 0.30%
Gabelli Asset Management, Inc. is average daily net assets. in excess of $1 billion of
the sub-investment adviser. the portfolio's aggregate
average daily net assets.
- ------------------------------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIO Annual rate of 0.60% of the Annual rate of 0.30% of the
portfolio's aggregate first $100 million and 0.25%
Caywood Scholl Capital Corporation average daily net assets. in excess of $100 million of
is the sub-investment adviser. the portfolio's aggregate
average daily net assets.
- ------------------------------------------------------------------------------------------------------
INTERNATIONAL GROWTH PORTFOLIO Annual rate of 0.85% of the Annual rate of 0.40% of the
portfolio's aggregate first $100 million, 0.35% of
Vontobel USA Inc. is the average daily net assets. $100 million to $200
sub-investment adviser. million, 0.30% of $200 to
$500 million and 0.25% in
excess of $500 million of
the portfolio's aggregate
average daily net assets.
- ------------------------------------------------------------------------------------------------------
</TABLE>
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. For each of the Funds a majority means the
lesser of:
(1) 67% of the portfolio shares represented at a meeting at which more
than 50% of the outstanding portfolio shares are represented, or
(2) More than 50% of the outstanding portfolio shares.
Each Contractholder should periodically review their allocation of purchase
payments and Surrender Values among the subaccounts and the guaranteed interest
account in light of their current objectives, the current market conditions, and
the risks of investing in each of the Funds' various portfolios. A full
description of the objectives, policies, restrictions, risks and expenses for
each of the Funds' portfolios can be found in the accompanying prospectus for
each of the Funds. The prospectus for each of the Funds should be read together
with this prospectus.
15
<PAGE> 21
PURCHASE OF PORTFOLIO SHARES BY MONY AMERICA VARIABLE ACCOUNT A
MONY America Variable Account A will buy and redeem shares from the Funds
at net asset value. Shares will be redeemed when needed for the Company to:
- Collect charges under the Contracts.
- Pay Surrender Value on full surrenders of the Contracts.
- Fund partial surrenders.
- Provide benefits under the Contracts.
- Transfer assets from one subaccount to another or between one or more
subaccounts of MONY America Variable Account A and the Guaranteed
Interest Account as requested by Contractholders.
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.
- Kept as assets of the corresponding subaccount.
SURRENDER VALUE -- The Contract's Cash Value, less (1) any applicable Surrender
Charge, (2) and any applicable Annual Contract Charge.
The Board of Directors of MONY Series Fund, Inc. and the Board of Trustees
of The Enterprise Accumulation Trust monitor the respective Fund for the
existence of material irreconcilable conflict between the interests of variable
annuity Contractholders and variable life insurance Contractholders. The Boards
shall report any such conflict to the boards of the Company and its affiliates.
The Boards of Directors of the Company and its affiliates have agreed to be
responsible for reporting any potential or existing conflicts to the Directors
and Trustees of each of the Funds. The Boards of Directors of the Company and
its affiliates will remedy any conflict at their own cost. The remedy may
include establishing a new registered management investment company and
segregating the assets underlying the variable annuity contracts and the
variable life insurance contracts.
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 MONY America Variable
Account A.
Crediting of Interest. Net purchase payments allocated by a Contractholder
to the Guaranteed Interest Account will be credited with interest at a rate
declared by us. We guarantee that the rate will not be less than 4% (0.010746%
compounded daily). For Contracts issued on and after May 1, 1994 (or on or after
such later date as approval required in certain states is obtained), the rate
declared by us is guaranteed not to be less than 3.5% (0.009426%, compounded
daily). Each interest rate we declare will apply to all net purchase payments
received or transfers from MONY America Variable Account A completed within the
period during which it is effective. Initial net purchase payments allocated to
the Guaranteed Interest Account will be credited with interest at the rate in
effect for the date on which, (1) the Contract is issued (and the funds
transferred into the Money Market Subaccount) and (2) from and after the date on
which the Free Look Privilege expires on all funds transferred from the Money
Market Subaccount to the Guaranteed Interest Account. Amounts may be withdrawn
from the Guaranteed Interest Account as a result of:
- Transfer
- Partial surrender
- Any charge imposed in accordance with the Contract
16
<PAGE> 22
Such withdrawals will be considered to be withdrawals of amounts (and any
interest credited thereon) most recently credited to the Guaranteed Interest
Account.
Prior to the expiration of the period for which a particular interest rate
was guaranteed, we will declare a renewal interest rate. The renewal interest
rate will be effective for the succeeding period we determine.
The Guaranteed Interest Account is described in greater detail in a
separate prospectus attached to this prospectus for your convenience.
DETAILED INFORMATION ABOUT THE POLICY
The Cash Value in MONY America Variable Account A and in the Guaranteed
Interest Account provide many of the benefits of your Contract. The information
in this section describes the benefits, features, charges and major provisions
of the Contract and the extent to which those depend upon the Cash Value,
particularly the Cash Value in MONY America Variable Account A. Attached to this
prospectus is a prospectus describing the Guaranteed Interest Account and its
various features, charges and major provisions.
PAYMENT AND ALLOCATION OF PURCHASE PAYMENTS
Issuance of the Contract
Individuals who want to buy a Contract must:
(1) Complete an application.
(2) Personally deliver the application to:
(a) A licensed agent of the Company who is also a registered
representative of the principal underwriter for the Contracts, MONY
Securities Corporation ("MSC"), or
(b) A registered representative of a broker dealer which had been
authorized by MSC to sell the Contract.
(3) Pay the minimum initial purchase payment.
The minimum purchase payment for individuals varies depending upon the use
of the Contract and the method of purchase. The chart below shows the minimum
purchase payment for each situation.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
USE OF CONTRACT OR
METHOD OF MAKING PURCHASE PAYMENT MINIMUM PURCHASE PAYMENT
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Individual retirement accounts and annuities under $2,000
Section 408 of the Code (other than Simplified
Employee Pensions)
- -------------------------------------------------------------------------------------------------------
Non-Qualified Plans $2,000
- -------------------------------------------------------------------------------------------------------
H.R. 10 plans (self-employed individuals' retirement $600
plans under 401 or 403 (c) of the Code), certain
corporate or association retirement plans,
Simplified Employee Pensions under Section 408 of
the Code
- -------------------------------------------------------------------------------------------------------
Annuity purchase plans sponsored by certain $600
tax-exempt organizations, governmental entities, or
public school systems under Section 403(b) of the
Code, and deferred compensation plans under Section
457 of the Code
- -------------------------------------------------------------------------------------------------------
Payroll deduction and automatic checking account Annualized rate of $600 (i.e., $600 per year,
withdrawal plans $300 semiannually, $150 quarterly or $50 per
month)
- -------------------------------------------------------------------------------------------------------
Government Allotment Plans $50 per month
- -------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 23
Effective January 1, 1989, the Contracts offered by this Prospectus have
been withdrawn form sale in connections with Qualified Plans which intend to
qualify for federal income tax advantages available under Section 403(b) of the
Code.
GOVERNMENT ALLOTMENT PLANS -- Payroll deduction plans used for financial
products by government employees.
Additional purchase payments of at least $100 may be made at any time. However,
for certain automatic payment plans, the smallest additional payment is $50.
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 needed before it will accept a Purchase Payment if, with that
Payment:
(1) Cumulative Purchase Payments made under any one or more Contracts
held by the Contract Contractholder, less
(2) The amount of any prior partial surrenders and their Surrender
Charges, exceed
(3) $1,500,000.
The Company reserves the right to reject an application for any reason
permitted by law.
CONTRACT DATE -- The date the contract begins as shown in the Contract.
Net Purchase Payments received before the Contract Date will be held in the
Company's General Account and will be credited with interest at not less than
3.5% per year if:
(1) The Contract is issued by the Company, and
(2) The Contract is accepted by the Contractholder.
No interest will be paid if the Contract is not issued or if it is declined by
the Contractholder. Net Purchase Payments will be held in the Money Market
Subaccount of MONY America Variable Account A if:
(1) The application is approved,
(2) The Contract is issued, and
(3) The Contractholder accepts the Contract.
These amounts will be held in that Account pending end of the Free Look Period.
(See "Free Look Privilege" on page .) Interest will be credited on amounts
held in the General Account beginning on the date the amounts are received.
Amounts are received on the day of actual receipt at the Company's Operation
Center. The prospective buyer will be told the reasons for the delay, the
initial Purchase Payment will be returned in full and the application declined
if:
(1) The application is not complete when received, and
(2) The application is not completed within 5 days.
The application will not be declined if the prospective buyer consents to the
Company's keeping the Purchase Payment until the application is completed.
Free Look Privilege
The Contractholder may return the Contract within 10 days of the delivery
date. The Contract must be returned to the Company or any agent of the Company.
When the Company receives the Contract, it will be voided as if it were never in
effect. The amount to be refunded (except for contracts entered into in the
Commonwealth of Pennsylvania) is equal to the greater of:
18
<PAGE> 24
(1) All purchase payments; and
(2) (a)Cash Value of the contract (as of the date received at the Home
Office or, if returned by mail, after being postmarked, properly addressed
and postage prepaid) plus (b) any deductions from purchase payments (i.e.
taxes for annuity considerations deducted, mortality and expense risk
charges deducted in determining Unit value of MONY America Variable Account
A, and asset charges deducted in determining the share value of the Funds).
The amount to be refunded for contracts entered into in the Commonwealth of
Pennsylvania is described in (2) above.
Allocation of Payments and Cash Value
Allocation of Payments. On the application, the Contractholder may
allocate Net Purchase Payments to the subaccount(s) of MONY America Variable
Account A or to the Guaranteed Interest Account. Net Purchase Payments (and any
interest thereon) are held in the Money Market Subaccount of MONY America
Variable Account A if they are received before the end of the Free Look Period.
The Net Purchase Payments will initially be allocated to the Money Market
Subaccount beginning on the later of:
(1) The Contract Date of the Contract, and
(2) The date the Payment is received at the Company's Operations
Center.
Net Purchase Payments will continue to be allocated to that subaccount
until the Free Look Period expires (See "Free Look Privilege" above.) After the
Free Look Period has expired and the correct and complete allocation
notification has been received, the Contract's Cash Value will automatically be
transferred to MONY America Variable Account A subaccount(s) or to the
Guaranteed Interest Account according to the Contractholder's percentage
allocation.
After the Free Look Period, under a non-automatic payment plan, if the
Contractholder does not:
(1) Specify the amount to be allocated among subaccounts, or
(2) Specify the percentage to be allocated among subaccounts, or
(3) The amount or percentage specified is incorrect or incomplete,
the Net Purchase Payments will be allocated under the Contractholder's most
recent instructions on record with the Company. The amount specified must not be
less than $10.00 and the percentage specified must not be less than 10% of the
Payment. For automatic payment plans, Net Purchase Payments will be allocated
according to the Contractholder's most recent instructions on record.
The Contractholder may change the specified allocation formula 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 (for example,
during periods of substantial market fluctuations), Contractholders may be
unable to request telephone allocation changes by telephone. In such cases, a
Contractholder would submit a written request. 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 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 designed, and which the Company believes are reasonable, to prevent
unauthorized instructions. If these procedures are followed:
(1) The Company shall not be liable for any loss as a result of
following fraudulent telephone instructions, and
(2) The Contractholder will therefore bear the entire risk of loss due
to fraudulent telephone instructions.
19
<PAGE> 25
A copy of the rules and the Company's form for electing telephone allocation
privileges is available from licensed agents of the Company who are 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.
Net Purchase Payments may be allocated in whole percentages to any number
of the available subaccounts and to the Guaranteed Interest Account. Allocations
must be in whole percentages, and no allocation may be for less than 10% of a
Net Purchase Payment. Allocation percentages must total 100%.
When allocated Purchase Payments are received they are credited to
subaccounts of MONY America Variable Account A in the form of Units. The number
of Units is determined by dividing the dollar amount allocated to a particular
subaccount by the unit value for that subaccount for the Valuation Date on which
the Purchase Payment is received.
Calculating Unit Values for Each Subaccount
The unit value of each subaccount on its first Valuation Date was set at
$10.00. The Company computes the unit value of a subaccount on any later
Valuation Date as follows:
(1) Calculate the value of the shares of the portfolio belonging to
the subaccount as of the close of business that Valuation Date. This
calculation is done before giving effect to any policy transactions for
that day, such as purchase payments or surrenders. For this purpose, the
net asset value per share reported to the Company by the managers of the
portfolio is used.
(2) Add the value of any dividends or capital gains distributions
declared and reinvested by the portfolio during the valuation period.
Subtract from this amount a charge for taxes, if any.
(3) Subtract a charge for the mortality and expense risk assumed by
the Company under the policy. If the previous day was not a Valuation Date,
then the charge is adjusted for the additional days between valuations.
(4) Divide the resulting amount by the number of units held in the
subaccount on the Valuation Date before the purchase or redemption of any
units on that date.
The unit value of these subaccounts may increase, decrease or remain the
same from Valuation Date to Valuation Date. The Unit value depends on the
investment performance of the portfolio of the Fund in which the subaccount
invests and any expenses and charges deducted from MONY America Variable Account
A. The Contractholder bears the entire investment risk. Contractholders should
periodically review their allocations of payments and values in light of market
conditions and overall financial planning requirements.
Calculation of Guaranteed Interest Account Cash Value
Net Purchase Payments to be allocated to the Guaranteed Interest Account
will be credited to that account on:
(1) The date received at the Operations Center, or
(2) If the day Payments are received is not a Valuation Date, then on
the next Valuation Date.
Interest will be credited daily. That part of a Net Purchase Payments allocated
to the Guaranteed Interest Account that exceeds the $250,000 limit imposed by
the Company will be returned to the Contractholder.
Calculation of Cash Value
The Contract's Cash Value will reflect:
- The investment performance of the selected subaccount(s) of MONY America
Variable Account A.
- Amounts credited (including interest) to the Guaranteed Interest Account.
- Any Net Purchase Payments.
20
<PAGE> 26
- Any Partial Surrenders.
- All Contract charges (including surrender charges) imposed.
There is no guaranteed minimum Cash Value, except to the extent Net Purchase
Payments have been allocated to the Guaranteed Interest Account. Because a
Contract's Cash Value at any future date will be dependent on a number of
variables, it cannot be predetermined.
The Cash Value will be computed first on the Contract Date and thereafter
on each Valuation Date. On the Contract Date, the Contract's Cash Value will be
the Net Purchase Payments received plus any interest credited on those Payments
during the period when Net Purchase Payments are held in the General Account.
(See "Issuance of the Contract" at page 17.)
After allocation of the amounts in the General Account to MONY America
Variable Account A or the Guaranteed Interest Account, on each Valuation Date,
the Contract's Cash Value will be computed as follows:
(1) Determine the aggregate of the Cash Values attributable to the
Contract in each of the subaccounts on the Valuation Date. This is done by
multiplying the subaccount's Unit value on that date by the number of
subaccount Units allocated to the Contract;
(2) Add any amount credited to the Guaranteed Interest Account. This
amount is the aggregate of all Net Purchase payments and:
- The addition of any interest credited.
- Addition or subtraction of any amounts transferred.
- Subtraction of any partial surrenders.
- Subtraction of any Contract charges, deductions.
(3) Add any Net Purchase Payment received on that Valuation Date;
(4) Subtract any partial surrender amount and its Surrender Charge
made on that Valuation Date;
(5) Subtract any Annual Contract Charge deductible on that Valuation
Date.
In computing the Contract's Cash Value, the number of subaccount Units
allocated to the Contracts is determined after any transfers among subaccounts
or between one or more of the subaccounts and the Guaranteed Interest Account.
Any transfer charges are also deducted. However, the computation of the
Contract's Cash Value is done before any other Contract transactions on the
Valuation Date, such as:
- Receipt of Net Purchase Payments.
- Partial Surrenders.
If a transaction would ordinarily require that the Contract's Cash Value be
computed for a day that is not a Valuation Date, the next following Valuation
Date will be used.
Transfers. You may transfer the value of the Contract among the
subaccounts after the Free Look Period has expired by sending a proper written
request to the Company's Operations Center. Transfers may be made by telephone
if you have proper authorization. The same rules apply as those for allocation
of payments by telephone. We will effectuate transfers at Unit values, and
determine all Unit values in connection with such transfers:
- At the close of the day that the transfer request is received at the
Operations Center, or
- If the date of receipt of the transfer request is not a Valuation Date,
on the next Valuation Date.
Different provisions apply to transfers involving the Guaranteed Interest
Account. (See "Payment and Allocation of Purchase Payments -- Transfers
Involving the Guaranteed Interest Account" at page 22.) There
21
<PAGE> 27
is no minimum amount that need be transferred. Currently, there are no
limitations on the number of transfers between subaccounts.
A transfer charge is not currently imposed on transfers. (See "Charges
Against Cash Value -- Transfer Charge" at page 27.) However, the Company
reserves the right to impose a charge for transfer in excess of four which will
not exceed $25 per transfer. If imposed the charge will be deducted from the
first subaccount(s) or the Guaranteed Interest Account from which the amounts
are transferred. This charge is in addition to the amount transferred. If there
is insufficient Cash Value in a subaccount or in the Guaranteed Interest Account
to provide for its proportionate share of the charge, then the entire charge
will be allocated in the same manner as the Annual Contract Charge. (See
"Charges Against Cash Value -- Annual Contract Charge" at page 26.) All
transfers in a single request are treated as one transfer transaction. A
transfer resulting from the first reallocation of Cash Value at the end of the
Free Look Period will not be subject to a transfer charge nor will it be counted
against the 4 transfers allowed in each Contract year without charge. Under
present law, transfers are not taxable transactions.
CONTRACT YEAR -- Any period of twelve (12) months commencing with the Contract
Date and each Contract Anniversary thereafter.
Transfers Involving the Guaranteed Interest Account. Transfers to or from
the Guaranteed Interest Account are subject to the following limitations.
- Prior approval of the Company if part of the transfer will cause amounts
credited to the Guaranteed Interest Account to exceed $250,000.
- The portion in excess of the $250,000 limitation will be allocated
back to the subaccounts designated in that transfer as the
subaccounts from which amounts were to be transferred. The
allocation back will be in the proportion that the amount requested
to be transferred from each subaccount bears to the total amount
transferred.
- Transfers from the Guaranteed Interest Account to one or more subaccounts
may be made once during each Contract Year, and the amount which may be
transferred if limited to the greater of:
- 25% of the amounts credited to the Guaranteed Interest Account on
the date the transfer would take effect or
- $5,000.
- Transfers from the Guaranteed Interest Account to one or more subaccounts
will be effective only on an anniversary of the Contract Date or on a
Valuation Date not more than 30 days thereafter.
- Requests received not more than 10 days before the anniversary of the
Contract Date will be executed on the Valuation Date which coincides with
or next follows the date the request is received.
- Requests more than 10 days before or 30 days after the anniversary of the
Contract Date will be returned to the Contractholder.
TERMINATION OF THE CONTRACT
The Contract will remain in effect until the earlier of:
(1) The date the Contract is surrendered in full,
(2) The date annuity payments start,
(3) The Contract Anniversary on which, after deduction for any Annual
Contract Charge then due, no Cash Value remains in the Contract, and
(4) The date the Death Benefit is payable under the Contract.
22
<PAGE> 28
CONTRACT ANNIVERSARY -- An anniversary of the Contract Date of the Contract.
CONTRACT DATE -- The date shown as the Contract Date of the Contract.
SURRENDERS
The Contractholder may elect to make a surrender of all or part of the
Contract's value provided it is:
- On or before the annuity payments start, and
- During the lifetime of the Annuitant.
Any such election shall specify the amount of the surrender. The surrender will
be effective on the date a proper written request is received by the Company at
its Operation Center.
The amount of the surrender may be equal to the Contract's Surrender Value,
which is its Cash Value less
(1) any applicable Surrender Charge, and
(2) (for a full surrender) any Annual Contract Charge.
The Surrender may also be for a lesser amount (a "partial surrender") of at
least $100. Requested partial surrenders that would leave a Cash Value of less
than $1,000 are treated and processed as a full surrender. In such case, the
entire Surrender Value will be paid to the Contractholder. For a partial
surrender, any Surrender Charge will be in addition to the amount requested by
the Contractholder.
A surrender will result in the cancellation of Units and the withdrawal of
amounts credited to the Guaranteed Interest Account in accordance with the
directions of the Contractholder. The aggregate value of the surrender will be
equal to the dollar amount of the surrender plus, if applicable, the Annual
Contract Charge and any Surrender Charge. For a partial surrender, the Company
will cancel Units of the particular subaccounts and withdraw amounts from the
Guaranteed Interest Account accumulation period under the allocation specified
by the Contractholder. The Unit value will be calculated as of the Valuation
Date the surrender request is received. Allocations may be by either amount or
percentage. Allocations by percentage must be in whole percentages (totaling
100%). At least 10% of the partial surrender must be allocated to any subaccount
designated by the Contractholder. Allocations by amount require that at least
$25 be allocated against the Guaranteed Interest Account or any subaccount. The
request will not be accepted if:
- There is insufficient Cash Value in the Guaranteed Interest Account or a
subaccount to provide for the requested allocation against it, or
- The Guaranteed Interest Account limitation is exceeded, or
- The request is incorrect.
If an allocation is not requested, then the entire amount of the partial
surrender will be allocated against the Guaranteed Interest Account and each
subaccount in the same proportion that the Contract's Cash Value held in said
accounts bears to the Contract's Cash Value.
Any surrender charge will be allocated against the Guaranteed Interest
Account and each subaccount in the same proportion that each allocation bears to
the total amount of the partial surrender. If (1) an allocation of the partial
surrender is not made, or (2) there is insufficient cash value in any of the
Contractholder's accounts to provide for any accounts proportionate share of the
Surrender Charge, then the entire amount will be allocated against each account
in the same proportion that the Cash Value in each account bears to the
Contract's Cash Value.
Any cash surrender amount will be paid in accordance with the requirements
of state insurance departments and the Investment Company Act of 1940. However,
the Company may be permitted to postpone such payment under the 1940 Act.
Postponement is currently permissible only for any period during which
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<PAGE> 29
(1) the New York Stock Exchange is closed other than customary weekend
and holiday closings, or
(2) trading on the New York Stock Exchange is restricted as determined
by the Securities and Exchange Commission, or
(3) an emergency exists as a result of which disposal of securities
held by the Fund is not reasonable practicable or it is not reasonably
practicable to determine the value of the net assets of the Fund, or
(4) for such other periods as the Securities and Exchange Commission
may by order permit for the protection of Contractholders.
Any cash surrender involving payment from amounts credited to the Guaranteed
Interest Account may be postponed, at the option of the Company, for up to 6
months from the date the request for a surrender or proof of death is received
by the Company. The Contractholder may elect to have the amount of a surrender
settled under one of the Settlement Options of the Contract. (See "Annuity
Provisions" at page 29.)
Contracts offered by this prospectus may be issued in connection with
retirement plans meeting the requirements of certain sections of the Internal
Revenue Code. Contractholders should refer to the terms of their particular
retirement plan for any limitations or restrictions on cash surrenders.
The tax results of a cash surrender should be carefully considered. (See
"Federal Tax Status" at page 37.)
DEATH BENEFIT
DEATH BENEFIT PROVIDED BY THE CONTRACT
The Company will pay a Death Benefit to the Beneficiary if:
- The Annuitant dies; and
- The death occurs before the annuity payments start.
The amount of the Death Benefit will be the greater of
(1) The Cash Value on the date of the Annuitant's death;
(2) The Purchase Payments paid, less any partial surrenders and their
Surrender Charges.
If the death of the Annuitant occurs on or after the annuity payments start, no
Death Benefit will be payable except as may be provided under the Settlement
Option elected.
ELECTION AND CONTRACT DATE OF ELECTION
The Contractholder may elect to have the Death Benefit of the Contract
applied under one or more Settlement Options to effect an annuity for the
Beneficiary as payee after the death of the Annuitant. The election must take
place:
- During the lifetime of the Annuitant, and
- Before the annuity payments start.
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
(1) to receive the Death Benefit in the form of a cash payment; or
(2) to have the Death Benefit applied under one of the Settlement
Options.
(See "Settlement Options" at page 30.) If an election by the payee is not
received by the Company within 30 days following the date proceeds become
payable, the payee will be considered to have elected a cash payment. Either
election described above may be made by filing a written election with the
Company in such
24
<PAGE> 30
form as it may require. Any proper election of a method of settlement of the
Death Benefit by the Contractholder will become effective on the date it is
signed. However, any election will be subject to any payment made or action
taken by the Company before receipt of the notice at the Company's Operation
Center.
Settlement option availability may be restricted by 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
- the election is considered to become effective, and
- due proof of death is received.
The Company may be permitted to postpone such payment under the 1940 Act. If the
death benefit is to be paid in one sum to the Successor Beneficiary, or to the
estate of the deceased Annuitant, payment will be made within seven (7) days of
the date due proof of the death of the Annuitant and the Beneficiary is received
by the Company. Interest at a rate determined by us will be paid on any Death
Benefit paid in one sum, from the date of the Annuitant's (or Contingent
Annuitant's, if applicable) death to the date of payment. The interest rate will
not be less than 2 3/4% annually.
CHARGES AND DEDUCTIONS
The following table summarizes the charges and deductions under the
Contract:
- --------------------------------------------------------------------------------
DEDUCTIONS FROM PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Tax Charge State and local -- 0%-3.5% -- Company
currently assumes responsibility; current
charge to Contractholder 0%.
Federal -- Currently 0% (Company reserves
the right to charge in the future.)
</TABLE>
- --------------------------------------------------------------------------------
DAILY DEDUCTION FROM VARIABLE ACCOUNT A
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Mortality & Expense Risk Charge Current daily rate -- 0.003425%
Annual Rate deducted daily from net assets Current Annual rate -- 1.25%
</TABLE>
- --------------------------------------------------------------------------------
DEDUCTIONS FROM CASH VALUE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Annual Contract Charge Non-Qualified Contracts -- $30 (subject to
Current charges listed may be increased to increase up to $50)
as much as $50 ($30 in certain states) on IRA and SEP-IRA -- $30 (subject to increase
30 days written notice. up to $50)
Qualified Contracts -- $15 (subject to
increase up to $50)
Transaction and Other Charges $0
Transfer Charge (Company reserves the right to charge up to
$25)
Surrender Charge See below for grading schedule. See page
Grades from 7% to 0% of Cash Value "Charges and Deductions -- Charges Against
surrendered based on a schedule. Cash Value" for details of how it is
computed.
</TABLE>
- --------------------------------------------------------------------------------
The following provides additional details of the charges and deductions
under the Contract.
25
<PAGE> 31
DEDUCTIONS FROM PURCHASE PAYMENTS
Deductions may be made from purchase payments for premium or similar taxes
prior to allocation of any net purchase payment among the subaccounts.
Currently, the Company makes no deduction, but may do so with respect to future
payments. The amount of the deduction will vary from locality to locality.
Deductions will generally range from 0% to 3.5% of purchase payments. Residents
of the Commonwealth of Pennsylvania should be aware that a tax on purchase
payments has been adopted. However, we are currently assuming responsibility for
payment of this tax. If the Company is going to make deductions for such tax
from future purchase payments, it will give notice to each affected
Contractholder.
CHARGES AGAINST CASH VALUE
Daily Deduction from MONY America Variable Account A
Mortality and Expense Risk Charge
The Company assumes mortality and expense risks. A charge for assuming such
risks is deducted daily from the net assets of MONY America Variable Account A.
This daily charge from MONY America Variable Account A is deducted at a current
daily rate of 0.003425 percent (equivalent to an annual rate of 1.25%) from the
value of the net assets of MONY America Variable Account A. Of the 1.25% charge,
.80% is for assuming mortality risks, and .45% is for assuming expense risks.
The charge is deducted from MONY America Variable Account A, and therefore the
subaccounts, on each Valuation Date. These charges will not be deducted from the
Guaranteed Interest Account. Where the previous day (or days) was not a
Valuation Date, the deduction on the Valuation Date will be 0.003425% multiplied
by the number of days since the last Valuation Date.
The Company believes that this level of charge is within the range of
industry practice for comparable individual flexible payment variable annuity
contracts.
The mortality risk assumed by the Company is that Annuitants may live for a
longer time than projected. If that occurs, an aggregate amount of annuity
benefits greater than that projected will 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% 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. However, if the amount of the charge exceeds the amount needed, the
excess will be kept by the Company in its general account. If the amount of the
charge is inadequate, the Company will pay the difference out of its general
account.
Deductions from Surrender Value
Annual Contract Charge
The Company has primary responsibility for the administration of the
Contract and MONY America Variable Account A. An annual Contract charge helps to
reimburse the Company for administrative expenses related to the maintenance of
the Contract. Ordinary administrative expenses expected to be incurred include
premium collection, recordkeeping, processing death benefit claims and
surrenders, preparing and mailing reports, and overhead costs. In addition, the
Company expects to incur certain additional administrative expenses in
connection with the issuance of the Contract, including the review of
applications and the establishment of Contract records.
The Company intends to administer the Contract itself through an
arrangement whereby it may buy some administrative services from MONY and such
other sources as may be available.
An annual contract charge will be deducted from the Contract's Cash Value to
help cover administrative expenses. Currently, for Non-Qualified Contracts (and
contracts issued for IRA and SEP-IRA) the amount of the charge is $30. The
charge may be increased to as much as $50. For Qualified Contracts (other than
those issued for IRA and SEP-IRA) currently the amount of the charge is reduced
to $15. This charge may
26
<PAGE> 32
be increased to as much as $50, and will be increased to $30 in the event the
Contract is no longer a Qualified Contract. The Contractholder will receive a
written notice 30 days in advance of any change in the charge.
The Annual Contract Charge is deducted from the Cash Value on the following
dates:
(1) Each Contract Anniversary before the date annuity payments start.
(2) On the day the annuity payments start.
The amount of the charge will be allocated against the Guaranteed Interest
Account and each subaccount of MONY America Variable Account A in the same
proportion that the Cash Value in those accounts bears to the Cash Value of the
Contract. The Company does not expect to make any profit from the administrative
cost deductions.
Transfer Charge
Contract value may be transferred 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). The Company reserves
the right to impose a transfer charge for each transfer in excess of 4
instructed by the Contractholder in a Contract year. The transfer charge
compensates the Company for the costs of effecting the transfer. The transfer
charge will not exceed $25. The Company does not expect to make a profit from
the transfer charge. If imposed, the transfer charge will be deducted from the
Contract's Cash Value held in the subaccount(s) or from the Guaranteed Interest
Account from which the transfer is made. The transfer charge will be allocated
against these accounts in the same proportion as the amounts transferred. If
there is insufficient value in an account to provide for its proportionate share
of the charge, then the entire charge will be allocated in the same manner as
the Annual Contract Charge.
Surrender Charge
A contingent deferred sales charge (called a "Surrender Charge") will be
imposed when a full or partial surrender is requested or at the start of annuity
benefits if it is during the first eight years of the contract.
The Surrender Charge will never exceed 7% of total purchase payments. The
Surrender Charge 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. The Company
will use funds from its General Account, which may contain funds deducted from
MONY America Variable Account A to cover mortality and expense risks borne by
the Company. (See "Mortality and Expense Risk Charge" at page 26.)
A Surrender Charge will be computed when a surrender is made and will be
deducted from the Cash Value if:
(1) All or a part of the Contract's Surrender Value (See "Surrenders"
at page 23) is surrendered, or
(2) The Surrender Value is received at maturity when the annuity
payments start.
A Surrender Charge will not be imposed:
(1) Against Cash Value surrendered in a contract year up to an amount
equal to net purchase payments made by the Contractholder prior to
the contract year of the surrender and the preceding 7 contract
years.
(2) To the extent necessary to permit the Contractholder to obtain an
amount equal to the Guaranteed Free Surrender Amount (See
"Guaranteed Free Surrender Amount" at page 29.)
(3) 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 30.)
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<PAGE> 33
(4) If the surrender is a full surrender and the following conditions
are met:
(a) Annuitant is age 59 1/2 or older on the date of the full
surrender;
(b) the Contract has been in effect for at least 10 contract years;
and
(c) one or more purchase payments were remitted during each of at
least 7 of the 10 contract years immediately preceding the date
of the surrender.
In no event will the aggregate Surrender Charge exceed 7% of the Cash Value. The
amount deducted from the Cash Value to cover the surrender charge is not subject
to the surrender charge.
For a partial surrender, the Surrender Charge will be deducted from any
remaining Contract Value, if sufficient. If the Contract Value is not
sufficient, it will be deducted from the amount surrendered. Any Surrender
Charge will be allocated against the Guaranteed Interest Account and each
subaccount of MONY America Variable Account A in the same proportion that the
amount of the partial surrender allocated against those accounts bears to the
total amount of the partial surrender. If there is insufficient cash value in
the Guaranteed Interest Account or any subaccount to provide for its
proportionate share of the charge, then the entire charge will be allocated
against said accounts in the same proportion that the Cash Value held in said
accounts bears to the Cash Value in the Guaranteed Interest Account and all
subaccounts.
No Surrender Charge will be deducted from Death Benefits (See "Death
Benefit" at page 24.)
For purposes of determining the Surrender Charge, surrenders will be
attributed to payments on a first-in, first-out basis. Contractholders should
note that this is different from the allocation method that is used for
determining tax obligations. (See "Federal Tax Status" at page 37.)
Amount of Surrender Charge. The amount of the Surrender Charge is
determined as follows:
Step 1. Allocate purchase payments on a first-in, first-out basis to the
amount surrendered. (Any purchase payments previously allocated to calculate a
surrender charge are unavailable for allocation to calculate any future
surrender charges); and
Step 2. Multiply each allocated purchase payment by the appropriate
surrender charge percentage determined on the basis of the table below:
- --------------------------------------------------------------------------------
SURRENDER CHARGE PERCENTAGE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CONTRACT YEAR SURRENDER CHARGE PERCENTAGE
- ----------------------------------------------------------------------------------------------
0 7%
- ----------------------------------------------------------------------------------------------
1 7
- ----------------------------------------------------------------------------------------------
2 6
- ----------------------------------------------------------------------------------------------
3 6
- ----------------------------------------------------------------------------------------------
4 5
- ----------------------------------------------------------------------------------------------
5 4
- ----------------------------------------------------------------------------------------------
6 3
- ----------------------------------------------------------------------------------------------
7 2
- ----------------------------------------------------------------------------------------------
8 (or more) 0
- ----------------------------------------------------------------------------------------------
</TABLE>
Step 3. Add the products of each multiplication in Step 2 above.
28
<PAGE> 34
Guaranteed Free Surrender Amount. The surrender charge may be reduced by
using the Guaranteed Free Surrender Amount provided for in the Contract. The
surrender charge will not be deducted in the following circumstances:
(1) For Qualified Contracts issued on or after May 1, 1994, (other
than Contracts issued for IRA and SEP-IRA) in certain states which
have granted approval, an amount up to the greater of:
(a) $10,000 (but not more than the Contract's Cash Value), or
(b) 10% of the Contract's Cash Value (at the time the first partial
surrender is request is received)
may be received in each Contract Year without a surrender charge.
(2) For Qualified Contracts issued before May 1, 1994 and for holders
of contracts in states where approval has not been granted, an
amount up to 10% of the Cash Value of the Contract (on the date
the partial surrender is request is received) in each Contract
Year.
(3) For Non-Qualified Contracts (and Contracts issued for IRA and
SEP-IRA) in certain states which have granted approval, an amount
up to 10% of the Cash Value of the Contract may be received in
each Contract Year without a surrender charge.
We reserve the right to limit the number of partial surrenders under the
Guaranteed Free Surrender Amount to 12 during any Contract Year. Since purchase
payments are allocated on a first-in, first-out basis, the free surrender amount
will not reduce surrender charges to the extent that any Cash Value in that
amount is equal to purchase payments received 8 or more contract anniversaries
ago. For illustrations of how the Surrender Charge is calculated, see Appendix A
beginning on page A-1 of this prospectus.
Taxes
Currently, no charge will be made against MONY America Variable Account A
for federal income taxes. However, the Company may make such a charge in the
future if income or gains within MONY America Variable Account A will incur any
federal income tax liability. Charges for other taxes, if any, attributable to
MONY America Variable Account A may also be made. (See "Federal Tax Status" at
page 37.)
Investment Advisory Fee
Because MONY America Variable Account A purchases shares of the Funds, the
net assets of MONY America Variable Account A will reflect the investment
advisory fee and other expenses incurred by the Funds. See "Table of Fees"
beginning at page 4 for a table which shows the fees and expenses incurred
during 1998 and "The Funds-MONY Series Fund, Inc." and "The Funds-Enterprise
Accumulation Trust" at page 4 for a table setting forth the investment advisory
fees.
ANNUITY PROVISIONS
ANNUITY PAYMENTS
Annuity payments under a Contract will begin on the date that is selected
by the Contractholder when the Contract is applied for. The date chosen for the
start of annuity payments may be:
(1) No earlier than the Contract Anniversary nearest the Annuitant's
10th birthday, and
(2) No later than the Contract Anniversary nearest the Annuitant's
95th birthday.
The minimum number of years from the Contract Date to the start of annuity
payments is 10. The date when annuity payments start may be:
(1) Advanced to a date that is not earlier than the 10th Contract
Anniversary.
(2) Deferred from time to time by the Contractholder by written notice
to the Company.
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The date when annuity payments start will be advanced or deferred if:
(1) Notice of the advance or deferral is received by the Company prior
to the current date for the start of annuity payments.
(2) The new start date for annuity payments 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.
When annuity payments start, the Contract's Surrender Value, less any state
taxes which may be imposed upon annuitization, will be applied to provide an
annuity or any other option previously chosen by the Contractholder and
permitted by the Company. A supplementary contract will be issued. That contract
will describe the terms of the settlement. No payments may be requested under
the Contract's surrender provisions after annuity payments start. 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 when annuity payments start.
ELECTION AND CHANGE OF SETTLEMENT OPTION
During the lifetime of the Annuitant and prior to the start of annuity
payments, the Contractholder may elect:
- One or more of the Settlement Options described below, or
- Another settlement option as may be agreed to by the Company.
The Contractholder may also change any election if written notice of the change
is received by the Company at its Operation Center prior to the start of annuity
payments. If no election is in effect when annuity payments start, Settlement
Option 3, for a Life Annuity with 10 years certain, based on the Annuitant's
life, will be considered to have been elected.
Settlement Options may also be elected by the Contractholder or the
Beneficiary as provided in the Death Benefit and Surrender sections of this
Prospectus. (See "Death Benefit" at page and "Surrenders" at page .)
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 (a) the income
payable during the joint lifetime or (b) two-thirds of that income. If a person
for whom this
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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
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 consider the election to have been made of the longest period
certain.
In Qualified Plans, settlement options available to Contractholders may be
restricted by the terms of the plans.
FREQUENCY OF ANNUITY PAYMENTS
At the time the Settlement Option is chosen, the payee may request that it
be paid:
- Quarterly
- Semiannually
- Annually
If the payee does not request a particular installment payment, the payments
will be made in monthly installments. However, if the net amount available to
apply under any Settlement Option is less than $1,000, the Company has 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 the payments to result in payments of at least $25.
ADDITIONAL PROVISIONS
The Company may require proof of the age of the Annuitant before making any
life annuity payment under the Contract. If the Annuitant's age has been
misstated, the amount payable will be the amount that would have been provided
under the Settlement Option at the correct age. Once life income payments begin,
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, 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 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 that apply 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.
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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 apply, on any employment-related plan for which a Contract
may be purchased.
OTHER PROVISIONS
OWNERSHIP
The Contractholder has all rights and may receive all benefits under the
Contract. During the lifetime of the Annuitant (and Contingent Annuitant if one
has been named), the Contractholder is the person so designated in the
application, unless:
(1) A change in Contractholder is requested, or
(2) A Successor Contractholder becomes the Contractholder.
On and after the death of the Annuitant (and Contingent Annuitant, if
applicable), the Beneficiary shall be the Contractholder.
The Contractholder may name a Successor Contractholder or a new
Contractholder at any time. If the Contractholder dies, the Successor
Contractholder, if living, becomes the Contractholder. Any request for change
must be:
(1) Made in writing; and
(2) Received at the Company.
The change will become effective as of the date the written request is signed. A
new choice of Contractholder or Successor Contractholder will apply to any
payment made or action taken by the Company after the request for the change is
received. Contractholders should consult a competent tax advisor prior to
changing Contractholders.
SUCCESSOR CONTRACTHOLDER -- The living person who, at the death of the
Contractholder, becomes the new Contractholder.
PROVISION REQUIRED BY SECTION 72(s) OF THE CODE
The Contract under a Non-Qualified Plan will be surrendered as of the date
of the Contractholder's death if:
- The Contractholder dies:
- Before the start of annuity payments, and
- While the Annuitant is living, and
- That Contractholder's spouse is not the Successor Contractholder as of
the date of the Contractholder's death.
- Satisfactory proof of death must be provided to the Company.
The surrender proceeds may be paid over the life of the Successor Contractholder
if:
- The Successor Contractholder is the Beneficiary, and
- The Successor Contractholder chooses that option.
Payments must begin no later than one year after the date of death. If the
Successor Contractholder is a surviving spouse, then the surviving spouse will
be treated as the new Contractholder of the Contract. Under
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such circumstances, it is not necessary to surrender the Contract. The proceeds
must be distributed within 5 years after the date of death if:
- The spouse is not the Successor Contractholder, and
- There is no designated Beneficiary.
However, under the terms of the Contract, if the spouse is not the Successor
Contractholder,
- the Contract will be surrendered as of the date of death, and
- the proceeds will be paid to the Beneficiary.
This provision shall not extend the term of the Contract beyond the date when
death proceeds become payable.
If the Contractholder dies on or after annuity payments start, any
remaining portion of the proceeds will be distributed using a method that is at
least as quick as the one used as of the date of the Contractholder's death.
PROVISION REQUIRED BY SECTION 401(a)(9) OF THE CODE
The entire interest of a Qualified Plan participant under the Contract will
be distributed to the Contractholder or his/her Designated Beneficiary.
Distribution will occur either by or beginning not later than April 1 of the
calendar year following the calendar year the Qualified Plan Participant attains
age 70 1/2. The interest is distributed:
- over the life of such Participant, or
- the lives of such Participant and Designated Beneficiary.
If (i) distributions have begun, and (ii) the Participant dies before the
Contractholder's entire interest has been distributed to him/her, the remaining
distributions will be made using a method that is at least as quick as that used
as of the date of the Participant's death. The Contract will be surrendered as
of the Participant's death if:
(1) The Participant dies before the start of such distributions, and
(2) There is no designated Beneficiary.
The surrender proceeds must be distributed within 5 years after the date of
death. But, the surrender proceeds may, be paid over the life of any Designated
Beneficiary at his/her option. 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, distributions will begin not earlier
than the date on which the Participant would have attained age 70 1/2. If the
surviving spouse dies before distributions to him/her begin, the provisions of
this paragraph shall be applied as if the surviving spouse were the Participant.
If the Plan is an IRA under Section 408 of the Code, the surviving spouse may
elect to forgo distribution and treat the IRA as his/her own plan.
It is the Contractholder's responsibility to assure that distribution rules
imposed by the Code will be met. Qualified Plan Contracts include those
qualifying for special treatment under Sections 401, 403, and 408 of the Code.
CONTINGENT ANNUITANT
Except where the Contract is issued in connection with a Qualified Plan, a
Contingent Annuitant may be designated by the Contractholder. Such designation
may be made once before annuitization, either
(1) in the application for the Contract, or
(2) after the Contract is issued, by written notice to the Company at
its Operation Center.
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The Contingent Annuitant may be deleted by written notice to the Company at its
Operation Center. A designation or deletion of a Contingent Annuitant will take
effect as of the date the written election was signed. The Company, however,
must first accept and record the change at its Operations Center. The change
will be subject to:
- any payment made by the Company, or
- action taken by the Company before the receipt of the notice at the
Company's Operation Center.
The Contingent Annuitant will be deleted from the Contract automatically by the
Company as of the Contract Anniversary following the Contingent Annuitant's 95th
birthday.
On the death of the Annuitant, the Contingent Annuitant will become the
Annuitant, under the following conditions:
(1) the death of the Annuitant must have occurred before annuity
payments start;
(2) the Contingent Annuitant is living on the date of the Annuitant's
death;
(3) if the Annuitant was the Contractholder on the date of death, the
Successor Contractholder must have been the Annuitant's spouse;
and
(4) if the date annuity payments start is later than the Contract
Anniversary nearest the Contingent Annuitant's 95th birthday, the
date annuity payments start will be automatically advanced to that
Contract Anniversary.
Effect of Contingent Annuitant's Becoming the Annuitant. If the Contingent
Annuitant becomes the Annuitant, the Death Benefit proceeds will be paid to the
Beneficiary only on the death of the Contingent Annuitant. If the Contingent
Annuitant was the Beneficiary on the Annuitant's death, the Beneficiary will be
automatically changed to the person who was the Successor Beneficiary on the
date of death. If there was no Successor Beneficiary, then the Contingent
Annuitant's executors or administrators, unless the Contractholder directed
otherwise, will become the Beneficiary. All other rights and benefits under the
Contract will continue in effect during the lifetime of the Contingent Annuitant
as if the Contingent Annuitant were the Annuitant.
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 determining the validity or effect of any assignment. The
Company shall not be liable for any payment or other settlement made by the
Company before receipt of the assignment.
If the Contract is issued under certain retirement plans, then it may not
be assigned, pledged or otherwise transferred except under conditions allowed
under applicable law.
Because an assignment may be a taxable event, a Contractholder should
consult a competent tax advisor before assigning the Contract.
CHANGE OF BENEFICIARY
So long as the Contract is in effect, the Beneficiary or Successor
Beneficiary may be changed. A change is made by submitting a written request to
the Company at its Operation Center. The form of the request must be 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 Operation Center.
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SUBSTITUTION OF SECURITIES
The Company may substitute shares of another mutual fund for shares of the
Funds already purchased or to be purchased in the future by Contract Purchase
Payments if:
(1) the shares of any portfolio of the Funds is no longer available
for investment by MONY America Variable Account A or,
(2) in the judgment of the Company's Board of Directors, further
investment in shares of one or more of the portfolios of the Funds
is inappropriate based on the purposes of the Contract.
A substitution of securities in any subaccount will take place only with prior
approval of the Securities and Exchange Commission and under such requirements
as it may impose.
MODIFICATION OF THE CONTRACTS
Upon notice to the Contractholder, the Contract may be modified by the
Company, but only if such modification
(1) is necessary to make the Contract or MONY America Variable Account
A 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 MONY America
Variable Account A 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 MONY AMERICA VARIABLE ACCOUNT A
MONY America Variable Account A may be operated as a management company
under the 1940 Act or it may be deregistered under the 1940 Act in the event the
registration is no longer required
- at the Company's election, and
- subject to any necessary vote by persons having the right to give voting
instructions for shares of the Funds held by the subaccounts.
Deregistration of MONY America Variable Account A requires an order by the
Securities and Exchange Commission. If there is a change in the operation of
MONY America Variable Account A under 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 MONY America Variable Account
A will be invested in shares of the designated portfolios of the Funds. The
Company is the legal holder of these shares. As such, it has the right to vote
on the following matters:
(1) Election of the Board of Directors of MONY Series Fund, Inc. or
the Board of Trustees of The Enterprise Accumulation Trust.
(2) Certain matters that are required by the 1940 Act to be approved
or ratified by the shareholders of a mutual fund.
(3) Any other matter that may be voted upon at a shareholders'
meeting.
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To the extent required by law, the Company will vote the shares of each of the
Funds held in MONY America Variable Account A (whether or not attributable to
Contractholders). The Company will vote at shareholder meetings of each of the
Funds according to the instructions received from Contractholders. 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 Contractholders with the proper forms to enable them to give it these
instructions. Currently, the Company may disregard voting instructions under the
circumstances described in the following paragraph.
The Company may, if required by state insurance officials, disregard voting
instructions if those instructions would require shares to be voted to
- Cause a change in the subclassification or investment objectives or
policies of one or more of the portfolios of either or both of the Funds.
- 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 the above changes if the Company reasonably disapproves those changes in
accordance with applicable federal regulations. If the Company does disregard
voting instructions, it will advise Contractholders of that action and its
reasons for the action in the next semiannual report to Contractholders.
- - Each Contractholder will have the equivalent of one vote per $100 of value
attributable to the Contract held in each subaccount of MONY America Variable
Account A.
- - Each Contractholder will have fractional votes for amounts less than $100.
- - For voting purposes, this value attributable to the Contract is equal to the
Cash Value.
- - The votes are represented as votes per $100 of value in each subaccount of
MONY America Variable Account A. These votes are converted into a
proportionate number of votes in shares of the corresponding portfolio of each
of the Funds.
- - Shares for which timely voting instructions are not received from
Contractholders will be voted by the Company. The Company will vote the shares
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 corresponding shares of the portfolio for which the
Contractholder may give instructions is computed by:
(1) Determining the value attributable to the Contract held in that
subaccount.
(2) Dividing that value by the net asset value of one share in the
designated portfolio of the respective Fund.
Example: Contract value held in subaccount = $540
Net asset value of portfolio shares = $20 per share on the record date
May give instructions on 5.4 votes ($540 divided by $100)
Converts into instructions on 27 shares of the Fund ($540 divided by
$20)
Matters on which Contractholders may give voting instructions include
the following:
(1) approval of any change in the Investment Advisory Agreement and
Services Agreement, if any, for the portfolio(s) of the Fund(s)
corresponding to the Contractholder's selected subaccount(s);
(2) any change in the fundamental investment policies of the
portfolio(s) corresponding to the Contractholder's selected
subaccount(s); and
(3) any other matter requiring a vote of the shareholders of either of
the Funds.
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Contractholders participating in a particular portfolio will vote separately on
the following matters pursuant to the requirements of Rule 18f-2 under the 1940
Act:
(1) approval of the Investment Advisory Agreement, or
(2) any change in a portfolio's fundamental investment policies,
DISTRIBUTION OF THE CONTRACTS
MONY Securities Corporation ("MSC"), a New York corporation organized on
September 26, 1969 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 a registered 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 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% 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 material.
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 (other than 403(b)), 408(b), and 457 of the Code.
The ultimate effect of federal income taxes on
- the value of the Contract's Cash Value,
- annuity payments, and
- economic benefit to the Contractholder, Annuitant, and the Beneficiary
may depend upon
- the type of retirement plan for which the Contract is purchased, and
- the tax and employment status of the individual concerned.
The following discussion of the treatment of Contracts and of the Company
under the federal income tax laws is general in nature. The discussion is based
on the Company's understanding of current federal income tax laws, and is not
intended as tax advice. Any person considering 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 MONY America Variable
Account A, to the extent that it is applied to increase reserves under the
Contracts, is substantially nontaxable to the Company.
TAXATION OF ANNUITIES IN GENERAL
The Contracts offered by this prospectus are designed for use in connection
with Qualified Plans and Non-Qualified Plans. All or a portion of the
contributions to such plans will be used to make Purchase Payments under the
Contracts. In general, contributions to Qualified Plans and income earned on
contributions to all plans are tax-deferred until distributed to plan
participants or their beneficiaries. Such tax deferral is not, however,
available for Non-Qualified Plans if the Contractholder is other than a natural
person unless
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the contract is held as an agent for a natural person. Annuity payments made as
retirement distributions under a Contract are generally taxable to the annuitant
as ordinary income except to the extent of
- Participant contributions (in the case of Qualified Plans), or
- Contractholder contributions (in the case of Non-Qualified Plans).
Contractholders, Annuitants, and Beneficiaries should seek qualified advice
about the tax consequences of distributions, withdrawals, and payments under the
retirement plans in connection with which the Contracts are purchased.
The Company will withhold and remit to the United States Government and,
where applicable to state governments part of the taxable portion of each
distribution made under a Contract unless the Contractholder or Annuitant
- provides his or her taxpayer identification number to the Company, and
- notifies the Company that he or she chooses not to have amounts withheld.
The Technical and Miscellaneous Revenue Act of 1988 ("TAMRA") has
requirements for determining the amount includable in gross income with respect
to distributions not received as an annuity. Distributions include those
resulting from gratuitous transfers. When computing the distributions for any 12
month period, distributions from all annuity contracts issued by the same
company to the Contractholder (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-benefited plans.
Effective January 1, 1993, distributions of plan benefits from qualified
retirement plans, other than individual retirement arrangements ("IRAs"),
generally will be subject to mandatory federal income tax withholding unless
they either are:
1. Part of a series of substantially equal periodic payments (at least
annually) for
- the participant's life or life expectancy,
- the joint lives or life expectancies of the participant and his/her
beneficiary,
- or a period certain of not less than 10 years, or
2. Required by the Code upon the participant's attainment of age
70 1/2 or death.
Such withholding will apply even if the distribution is rolled over into
another qualified plan, including an IRA. The withholding can be avoided if the
participant's interest is directly transferred by the old plan to another
eligible qualified plan, including an IRA. A direct transfer to the new plan can
be made only in accordance with the terms of the old plan. If withholding is not
avoided, the amount withheld may be subject to income tax and excise tax
penalties.
Under the generation skipping transfer tax, the Company may be liable for
payment of this tax under certain circumstances. In the event that the Company
determines that such liability exists, an amount necessary to pay the generation
skipping transfer tax may be subtracted from the death benefit proceeds.
ANNUITY CONTRACTS GOVERNED BY SECTION 403(b) OF THE CODE
An annuity contract will not be treated as a Qualified Contract under
Section 403(b) of the Code unless distributions which are attributable to a
contribution made pursuant to a salary reduction agreement may be paid only:
(1) when the Contractholder attains age 59 1/2;
(2) when the Contractholder separates from the service of his employer;
(3) when the Contractholder dies;
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(4) when the Contractholder becomes permanently disabled within the meaning
of Section 72(m)(7) of the Code; or
(5) in the case of hardship.
These restrictions generally apply to contributions made after December 31, 1988
and to any increase in Cash Value of the Contract after December 31, 1988.
Therefore, effective January 1, 1989 and thereafter, any contributions made, or
increase in Cash Value, on or after January 1, 1989 will be restricted from
withdrawal except upon the five sets of circumstances set forth above. Hardship
withdrawals are limited to the amount of the Contractholder's purchase payments.
However, any purchase payments that reflect employer contributions and the
earnings thereon will not be restricted unless specifically provided for by the
applicable employer's plan.
Effective January 1, 1989, the Contracts offered by this prospectus have
been withdrawn from sale in connection with Qualified Plans which intend to
qualify for federal income tax advantages under Section 403(b) of the Code.
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;
(4) Non-Qualified Plans; And
(5) Tax-Sheltered Annuity Plans established by certain educational and
tax-exempt organizations under Section 403(b) of the Code.
(Effective January 1, 1989, the Contracts offered by this
prospectus have been withdrawn from sale in all states in
connection with Qualified Plans which intend to qualify for
federal income tax advantages under Section 403(b) of the Code).
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 here to provide more than general information about the use of
Contracts with the various types of retirement plans. Participants in such plans
as well as Contractholders, Annuitants, and Beneficiaries are cautioned that the
rights of any person to any benefits under these plans are subject to the terms
and conditions of the plans themselves, regardless of the terms and conditions
of the Contracts. The Company will provide purchasers of Contracts used in
connection with Individual Retirement Annuities with such supplementary
information as may be required by the Internal Revenue Service or other
appropriate agency. Any person contemplating the purchase of a Contract should
consult a qualified tax adviser.
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SPECIAL EXCHANGE OFFER
Holders of flexible premium variable annuity contracts issued by us on and
after November 1, 1987 have a special right to exchange the contract which they
hold for a Contract. We will waive all charges imposed on the surrender of the
contract which they hold, provided that:
(1) an application for the Contract be submitted upon the exercise of this
special right, and
(2) the special right is exercised not later than the expiration of 60 days
from the later of:
(a) the date upon which the exchange program becomes effective, and
(b) the date the Contract becomes available in the state in which such
contractholder resides.
PERFORMANCE DATA
We may advertise the performance of the MONY America Variable Account A
subaccounts. We will also report performance to contract Contractholders and may
make performance information available to prospective purchasers. This
information will be presented in compliance with applicable law.
Performance information contained in these advertisements is based upon
historical earnings and is not indicative of future performance. The data for
each subaccount reflects the investment results of the designated portfolio of
the Fund and recurring charges and deductions borne by or imposed on the
portfolio and the subaccount. Set forth below for each subaccount is the manner
in which the data contained in such advertisements will be calculated.
Money Market Subaccount. The performance data for this subaccount will
reflect the "yield" and "effective yield". The "yield" of the subaccount refers
to the income generated by an investment in the Subaccount over the seven day
period stated in the advertisement. This income is "annualized", that is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52 week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly, but, when annualized,
the income earned by an investment in the subaccount is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
Subaccounts other than the Money Market Subaccount. The performance data
for these subaccounts will reflect the "yield" and "total return". The "yield"
of each of these subaccounts refers to the income generated by an investment in
that subaccount over the 30 day period stated in the advertisement and is the
result of dividing that income by the value of the subaccount. The value of each
subaccount is the average 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 a Contractholder would receive during the period indicated if a
$1,000 Purchase Payment was made the indicated number of years ago. It reflects
historical investment results less charges and deductions of both the Funds and
MONY America Variable Account A, 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
40
<PAGE> 46
accompanied by standard performance data, and the period covered or other
non-standard features will be disclosed.
Performance information for MONY America Variable Account A may be compared
in advertisements, sales literature, and reports to contract Contractholders 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 and to the Consumer Price Index (a measure for inflation)in
order to provide the reader a basis for comparison of performance. Reports and
promotional literature may also contain the Company's rating or a rating of the
Company's claims paying ability as determined by firms that analyze and rate
insurance companies and by nationally recognized statistical rating
organization.
ADDITIONAL INFORMATION
This Prospectus does not contain all the information set forth in the
registration statement, certain portions of which have been omitted pursuant to
the rules and regulations of the Securities and Exchange Commission. The omitted
information may be obtained from the Commission's principal office in
Washington, D.C., upon payment of the fees prescribed by the Commission.
For further information with respect to the Company and the Contracts
offered by this Prospectus, including the Statement of Additional Information
(which includes financial statements relating to the Company), Contractholders
and prospective investors may also contact the Company at its address or phone
number set forth on the cover of this Prospectus for requesting such statement.
The Statement of Additional Information is available from the Company without
charge.
LEGAL PROCEEDINGS
There are no legal proceedings to which MONY America Variable Account A 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 MONY America Variable Account A 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 MONY America
Variable Account A. The financial statements of the Company and MONY America
Variable Account A are included in the Statement of Additional Information.
41
<PAGE> 47
TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1999
<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
Mail Drop 8-27
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 B2-88/B4-88
FORM NO. 13454 (5/99) 33-20453
42
<PAGE> 48
APPENDIX A
CALCULATION OF SURRENDER CHARGE
ILLUSTRATION 1
Suppose an initial Purchase Payment of $15,000 is the only payment made,
and no taxes are deducted from this payment. At the beginning of the third
Contract Year, the Cash Value of the Contract has grown to $18,000 and the
Contractholder requests a partial surrender of $2,000.
The Surrender Charge is determined as follows:
Step 1: Purchase Payments are allocated to the surrender amount, as
follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACT
ANNIVERSARIES SINCE AMOUNT AMOUNT AVAILABLE
PURCHASE PAYMENT CONTRACT YEAR ALLOCATED FOR ALLOCATION TO
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER FUTURE SURRENDERS
------------------- ---------------- ------------ -----------------
<S> <C> <C> <C>
0............................... 3 $ 0 $ 0
1............................... 2 0 0
2............................... 1 2,000 13,000
</TABLE>
IF THE CONTRACT IS A NON-QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as 10% of the
Cash Value ($1,800). Reduce the resulting amount allocated to surrender ($2,000)
by the Guaranteed Free Surrender Amount ($1,800), and apply the Surrender Charge
Percentages as follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACT AMOUNT OF
ANNIVERSARIES SINCE AMOUNT SURRENDER SURRENDER
PURCHASE PAYMENT CONTRACT YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PCT)
------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
0..................... 3 $ 0 7% $ 0
1..................... 2 0 7 0
2..................... 1 200 6 12
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $12.
The Surrender Charge, plus the amount of the surrender is then deducted
from the remaining Cash Value of the Non-Qualified Contract, for a total
withdrawal of $2,012.
IF THE CONTRACT IS A QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to the
greater of 10% of the Cash Value ($1,800) of the Qualified Contract or up to
$10,000. Since the partial surrender requested is less than $10,000 (although it
is greater than 10 percent), there is no Surrender Charge.
Since there is no Surrender Charge, the entire amount requested is
available under the Guaranteed Free Surrender Amount provision of the Qualified
Contract.
Assuming that in the middle of the tenth Contract Year, a full surrender is
requested. The Cash Value at the time of full surrender is $28,000. Since this
is a full surrender, the Annual Contract Charge (currently $30) is deducted from
the Cash Value, leaving a remaining Cash Value balance of $27,970. For this
calculation, there is $13,000 of Purchase Payments made in the first Contract
Year.
A-1
<PAGE> 49
The Surrender Charge is determined as follows:
Step 1: Purchase Payments are allocated to the surrender amount, as
follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACT
ANNIVERSARIES SINCE AMOUNT
PURCHASE PAYMENT CONTRACT YEAR ALLOCATED TO
RECEIVED BY US PAYMENT RECEIVED SURRENDER
------------------- ----------------- ------------
<S> <C> <C>
0................................................. 10 $ 0
1................................................. 9 0
2................................................. 8 0
3................................................. 7 0
4................................................. 6 0
5................................................. 5 0
6................................................. 4 0
7................................................. 3 0
8 or more......................................... 1 and 2 13,000
</TABLE>
IF THE CONTRACT IS A NON-QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to 10% of
the Cash Value ($2,800) of the Non-Qualified Contract. Reduce the resulting
amount allocated to surrender ($13,000) by the Guaranteed Free Surrender Amount
($2,800), and apply the Surrender Charge Percentages as follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACT AMOUNT OF
ANNIVERSARIES SINCE AMOUNT SURRENDER SURRENDER
PURCHASE PAYMENT CONTRACT YEAR ALLOCATED TO CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED SURRENDER PERCENTAGE (AMT X PCT)
------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
0............................ 10 $ 0 7% $0
1............................ 9 0 7 0
2............................ 8 0 6 0
3............................ 7 0 6 0
4............................ 6 0 5 0
5............................ 5 0 4 0
6............................ 4 0 3 0
7............................ 3 0 2 0
8 or more.................... 1 and 2 10,200 0 0
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $0.
A-2
<PAGE> 50
IF THE CONTRACT IS A QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to the
greater of 10% of the Cash Value ($2,800) of the Qualified Contract or up to
$10,000. Reduce the resulting amount allocated to surrender ($13,000) by the
Guaranteed Free Surrender Amount ($10,000), and apply the Surrender Charge
Percentages as follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACT AMOUNT OF
ANNIVERSARIES SINCE AMOUNT SURRENDER SURRENDER
PURCHASE PAYMENT CONTRACT YEAR ALLOCATED TO CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED SURRENDER PERCENTAGE (AMT X PCT)
------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
0........................... 10 $ 0 7% $0
1........................... 9 0 7 0
2........................... 8 0 6 0
3........................... 7 0 6 0
4........................... 6 0 5 0
5........................... 5 0 4 0
6........................... 4 0 3 0
7........................... 3 0 2 0
8 or more................... 1 and 2 3,000 0 0
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $0.
Since there are no Purchase Payments such that 7 or less policy
anniversaries had passed since they were received, no part of the surrender
proceeds are subject to a Surrender Charge. Hence, no Surrender Charge is
assessed on this full surrender.
ILLUSTRATION 2
Suppose Purchase Payments of $2,000 are made at the beginning of every
Contract Year. No taxes are deducted from these Payments. In the middle of the
third Contract Year, a partial surrender of $500 is requested. Suppose the Cash
Value has grown to $7,000 at the time of the partial surrender request.
The Surrender Charge is determined as follows:
Step 1: Purchase Payments are allocated to the surrender amount, as
follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACT
ANNIVERSARIES SINCE AMOUNT AVAILABLE FOR
PURCHASE PAYMENT CONTRACT YEAR ALLOCATED TO ALLOCATION TO
RECEIVED BY US PAYMENT RECEIVED SURRENDER FUTURE SURRENDERS
------------------- ---------------- ------------ -----------------
<S> <C> <C> <C>
0................................. 3 $ 0 $2,000
1................................. 2 0 2,000
2................................. 1 500 1,500
</TABLE>
IF THE CONTRACT IS A NON-QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to 10% of
the Cash Value ($700) of the Non-Qualified Contract. Reduce the resulting amount
allocated to surrender ($500) by the Guaranteed Free Surrender Amount ($700),
and apply the Surrender Charge Percentages as follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACT AMOUNT OF
ANNIVERSARIES SINCE AMOUNT SURRENDER SURRENDER
PURCHASE PAYMENT CONTRACT YEAR ALLOCATED TO CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED SURRENDER PERCENTAGE (AMT X PCT)
------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
0......................... 3 $0 7% $0
1......................... 2 0 7 0
2......................... 1 0 6 0
</TABLE>
A-3
<PAGE> 51
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $0.
The partial surrender will be allocated to $500 of payments made in the
first Contract Year. But since 10 percent of the Cash Value ($700) of the
Non-Qualified Contract could be surrendered under the Guaranteed Free Surrender
Amount Provision, the partial surrender of $500 could be withdrawn without a
surrender charge.
IF THE CONTRACT IS A QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to the
greater of 10% of the Cash Value ($700) of the Qualified Contract or up to
$10,000. Since the partial surrender requested is less than $10,000 and less
than 10% there is no surrender charge.
Since there is no Surrender Charge, the entire amount requested is
available under the Guaranteed Free Surrender Amount provision of the Qualified
Contract.
Assume that Purchase Payments of $2,000 have continually been made at the
beginning of each Contract Year, and that in the middle of the tenth Contract
Year, a partial surrender of $7,500 is requested. The Cash Value is $32,600 at
the time of the partial surrender request.
The Surrender Charge is determined as follows:
Step 1: Purchase Payments are allocated to the surrender amount, as
follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACT AMOUNT
ANNIVERSARIES SINCE AMOUNT AVAILABLE FOR
PURCHASE PAYMENT CONTRACT YEAR ALLOCATED TO ALLOCATION TO
RECEIVED BY US PAYMENT RECEIVED SURRENDER FUTURE SURRENDERS
------------------- ---------------- ------------ -----------------
<S> <C> <C> <C>
0................................. 10 $ 0 $2,000
1................................. 9 0 2,000
2................................. 8 0 2,000
3................................. 7 0 2,000
4................................. 6 0 2,000
5................................. 5 0 2,000
6................................. 4 2,000 0
7................................. 3 2,000 0
8 or more......................... 1 and 2 3,500 0
</TABLE>
IF THE CONTRACT IS A NON-QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as 10% of the
Cash Value ($3,260) of the Non-Qualified Contract. Reduce the resulting amount
allocated to surrender ($3,500) in Contract Years 1 and 2 by the Guaranteed Free
Surrender Amount ($3,260), and apply the Surrender Charge Percentages as
follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACT AMOUNT OF
ANNIVERSARIES SINCE AMOUNT SURRENDER SURRENDER
PURCHASE PAYMENT CONTRACT YEAR ALLOCATED TO CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED SURRENDER PERCENTAGE (AMT X PCT)
------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
6................................... 4 $2,000 3% $60
7................................... 3 2,000 2 40
8 or more........................... 1 and 2 240 0 0
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $100.
The Surrender Charge, plus the amount of the surrender is then deducted
from the remaining Cash Value of the Non-Qualified Contract, for a total
withdrawal of $7,600.
A-4
<PAGE> 52
IF THE CONTRACT IS A QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to the
greater of 10% of the Cash Value ($3,260) of the Qualified Contract or up to
$10,000. Since the partial surrender requested is less than $10,000 (although it
is greater than 10 percent), there is no surrender charge.
Since there is no Surrender Charge, the entire amount requested is
available under the Guaranteed Free Surrender Amount provision of the Qualified
Contract.
Assuming that in the middle of the twelfth Contract Year, a full surrender
with the full proceeds being settled under Settlement Option 3, Single Life
Income for 10 years certain and during the balance of the annuitant's lifetime,
payments of $2,000 have continuously been made at the beginning of each contract
year. The Cash Value at the time of the full surrender is $26,000. Since this
example assumes a full surrender is being made, the Annual Contract Charge
(currently $30) is deducted from the Cash Value, leaving a remaining Cash Value
of $25,970.
Since the full proceeds are being applied to Settlement Option 3, the
Surrender Charge is $0. The entire remaining Cash Value of $25,970 is applied to
the settlement option.
A-5
<PAGE> 53
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 54
Bulk Rate
U.S. Postage
P A I D
Permit No. 8048
New York,
New York
MONY Life Insurance Company of America
Administrative Offices
1740 Broadway, New York, NY 10019
[THE MONY GROUP LOGO]
MONY Life Insurance Company of America and
MONY
Securities Corporation are members of The
MONY Group
- --------------------------------------------------------------------------------
Form No. 13453 SL 5/99
<PAGE> 55
THE MONYMASTER
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1999
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACT
ISSUED BY
MONY AMERICA VARIABLE ACCOUNT A
AND
MONY LIFE INSURANCE COMPANY OF AMERICA
This Statement of Additional Information is not a prospectus, but it
relates to, and should be read in conjunction with, the prospectus dated May 1,
1999 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 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. 13454SL(5/99) 33-20453
<PAGE> 56
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.
MONY Life Insurance Company ("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 stock life insurance company. It was organized under the laws of
the state of New York in 1842 as a mutual life insurance company under the name
The Mutual Life Insurance Company of New York. 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 1998 of approximately $25.0 billion. As of
December 31, 1998, MONY had approximately $289.8 million invested in the Company
to support its insurance operations. MONY intends from time to time to make
additional capital contributions to the Company as needed to enable it to meet
its reserve requirements and expenses in connection with its business.
Generally, MONY is under no obligation to make such contributions, and its
assets do not back the benefits payable under the Contracts.
At May 1, 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 1998, the Company paid MONY $84,872,878 for all services provided
under the Service Agreement.
LEGAL OPINION
Legal matters relating to federal securities laws applicable to the issue
and sale of the Contract and all matters of Arizona law pertaining to the
Contract, including the validity of the Contract and the Company's right to
issue the Contract, have been passed upon by Willard G. Eldred, Esq., then Vice
President and Deputy General Counsel, MONY.
INDEPENDENT ACCOUNTANTS
The audited financial statements of the Company and the Variable Account
appearing on the following pages have been audited by 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 1177 Avenue of the
Americas, New York, New York 10036.
(1)
<PAGE> 57
FEDERAL TAX STATUS
INTRODUCTION
The Contract is designed for use to fund retirement plans which may or may
not be Qualified Plans under the provisions of the Internal Revenue Code (the
"Code"). The ultimate effect of federal income taxes on the Contract value, on
annuity payments, and on the economic benefit to the Contractholder, Annuitant,
or Beneficiary depends on the type of retirement plan for which the Contract is
purchased and upon the tax and 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 nonindividual Contractholders, there are
no income taxes on increases in the value of a Contract until a distribution
occurs, in the form of a full surrender, a partial surrender, a death benefit,
an assignment or gift of the Contract, or as annuity payments.
SURRENDERS, DEATH BENEFITS, ASSIGNMENTS AND GIFTS
A Contractholder who fully surrenders his or her Contract is taxed on the
portion of the payment that exceeds his or her cost basis in the Contract. For
Non-Qualified Contracts, the cost basis is generally the amount of the Purchase
Payments made for the Contract, and the taxable portion of the surrender payment
is taxed as ordinary income. For Qualified Contracts, the cost basis is
generally zero, except to the extent of non-deductible employee contributions,
and the taxable portion of the surrender payment is generally taxed as ordinary
income subject to special elective 5-year (and, for certain eligible persons,
10-year) income averaging in the case of certain Qualified Contracts. A
Beneficiary entitled to receive a lump sum death benefit upon the death of the
Annuitant is taxed on the portion of the amount that exceeds the
Contractholder's cost basis in the Contract. If the Beneficiary elects to
receive annuity payments within 60 days of the Annuitant's death, different tax
rules apply. (See "Annuity Payments" below.)
Partial surrenders received under Non-Qualified Contracts prior to
annuitization are first included in gross income to the extent Surrender Value
exceeds Purchase Payments less prior non-taxable distributions, and the balance
is treated as a non-taxable return of principal to the Contractholder. For
partial surrenders under a Qualified Contract, payments are generally prorated
between taxable income and 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.
A Contractholder who assigns or pledges a Non-Qualified Contract is treated
as if he or she had received the amount assigned or pledged and thus is subject
to taxation under the rules applicable to surrenders. A Contractholder who gives
away the Contract (i.e., transfers it without full and adequate consideration)
to anyone other than his or her spouse is treated for income tax purposes as if
he or she had fully surrendered the Contract.
ANNUITY PAYMENTS
The non-taxable portion of each annuity payment is determined by an
"exclusion ratio" formula which establishes the ratio that the cost basis of the
Contract bears to the total expected value of annuity payments
(2)
<PAGE> 58
for the term of the annuity. The remaining portion of each payment is taxable.
Such taxable portion is taxed at ordinary income rates. For Qualified Contracts,
the cost basis is generally zero. With annuity payments based on life
contingencies, the payments will become fully taxable once the Annuitant lives
longer than the life expectancy used to calculate the non-taxable portion of the
prior payments. Conversely, a tax deduction in the Annuitant's last taxable
year, equal to the unrecovered cost basis, is available if the Annuitant does
not live to life expectancy.
PENALTY TAX
Payments received by Contractholders, Annuitants, and Beneficiaries under
both Qualified and Non-Qualified Contracts may be subject to both ordinary
income taxes and a penalty tax equal to 10 percent of the amount received that
is includable in income. The penalty is not imposed on amounts received: (a)
after the taxpayer attains age 59 1/2; (b) in a series of substantially equal
payments made for life or life expectancy following separation from service; (c)
after the death of the Contractholder (or, where the Contractholder is not a
human being, the death of the Annuitant); (d) if the taxpayer is totally
disabled; (e) upon early retirement under the plan after the taxpayer's
attainment of age 55; or (f) which are used for certain medical care expenses.
Exceptions (e) and (f) do not apply to Individual Retirement Accounts and
Annuities and Non-Qualified Contracts. An additional exception for Non-Qualified
Contracts is amounts received as an immediate annuity.
INCOME TAX WITHHOLDING
The Company is required to withhold federal, and, where applicable, state,
income taxes on taxable amounts paid under the Contract unless the recipient
elects not to have withholding apply. The Company will notify recipients of
their right to elect not to have withholding apply.
Effective January 1, 1993, distributions of plan benefits from qualified
retirement plans, other than individual retirement arrangements ("IRAs"),
generally will be subject to mandatory federal income tax withholding unless
they either are:
1. Part of a series of substantially equal periodic payments (at least
annually) for the participant's life or life expectancy, the joint lives or
life expectancies of the participant and his/ her beneficiary, or a period
certain of not less than 10 years, or
2. Required by the Code upon the participant's attainment of age
70 1/2 or death.
Such withholding will apply even if the distribution is rolled over into
another qualified plan, including an IRA. The withholding can be avoided if the
participant's interest is directly transferred by the old plan to another
eligible qualified plan, including an IRA. A direct transfer to the new plan can
be made only in accordance with the terms of the old plan. If withholding is not
avoided, the amount withheld may be subject to income tax and excise tax
penalties.
DIVERSIFICATION STANDARDS
The United States Secretary of the Treasury has the authority to set
standards for diversification of the investments underlying variable annuity
contracts (other than pension plan contracts). The Secretary of the Treasury has
issued certain regulations. Further regulations may be issued. The Funds are
designed to be managed to meet the diversification requirements for the Contract
as those requirements may change from time to time. The Company intends to
satisfy those requirements so that the Contract will be treated as an annuity
contract.
The Secretary of the Treasury has announced that he expects to issue
regulations or Revenue Rulings that will prescribe the circumstances in which a
Contractholder's control of the investments of a segregated asset account may
cause the Contractholder, rather than the insurance company, to be treated as
the owner of the assets of the account. The regulations or Revenue Rulings could
impose requirements that are not reflected in the Contract. The Company,
however, has reserved certain rights to alter the Contract and investment
alternatives so as to comply with such regulations or Revenue Rulings. Since the
regulations or
(3)
<PAGE> 59
Revenue Rulings have not been issued, there can be no assurance as to the
content of such regulations or Revenue Rulings or even whether application of
the regulations or Revenue Rulings will be prospective. For these reasons,
Contractholders are urged to consult with their own tax advisers.
QUALIFIED PLANS
The Contract is designed for use with several types of Qualified Plans. The
tax rules applicable to participants in such Qualified Plans vary according to
the type of plan and the terms and conditions of the plan itself. Moreover, many
of these tax rules were changed by the Tax Reform Act of 1986. Therefore, no
attempt is made herein to provide more than general information about the use of
the Contract with the various types of Qualified Plans. Participants under such
Qualified Plans as well as Contractholders, Annuitants, and Beneficiaries are
cautioned that the rights of any person to any benefits under such Qualified
Plans may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Contract issued in connection
therewith. Following are brief descriptions of the various types of Qualified
Plans and of the use of the Contract in connection therewith. Purchasers of the
Contract should seek competent advice concerning the terms and conditions of the
particular Qualified Plan and use of the Contract with that plan.
TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable organizations specified in Section 501(c)(3) of the
Code and certain educational organizations to purchase annuity contracts and,
subject to certain contribution limitations, exclude the amount of Purchase
Payments from gross income for tax purposes. However, such Purchase Payments may
be subject to Social Security (FICA) taxes. These annuity contracts are commonly
referred to as "Tax-Sheltered Annuities." Effective January 1, 1989, the
Contracts have been withdrawn from sale to Qualified Plans which intend to
qualify for federal income tax advantages available under Section 403(b).
H.R. 10 PLANS
The Self-Employed Individuals Tax Retirement Act of 1962, as amended, which
is commonly referred to as "H.R. 10," permits self-employed individuals to
establish Qualified Plans for themselves and their employees. The tax
consequences to participants under such plans depend upon the plan itself. In
addition, such plans are limited by law to maximum permissible contributions,
distribution dates, and tax rates applicable to distributions. In order to
establish such a plan, a plan document, usually in prototype form 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> 60
PERFORMANCE DATA
MONEY MARKET SUBACCOUNT
For the seven-day period ended December 31, 1998, the yield was 3.68% and
the effective yield was 3.74%.
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> 61
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
TOTAL RETURN
(ASSUMING $1,000 PAYMENT AT BEGINNING OF
PERIOD AND SURRENDER AT END OF PERIOD)
<TABLE>
<CAPTION>
FOR THE
FOR THE FOR THE FOR THE PERIOD SINCE
1 YEAR ENDED 5 YEARS ENDED 10 YEARS ENDED INCEPTION THROUGH
SUBACCOUNT DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998
---------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Equity...................... 1.56% 17.58% 15.55% 15.12%
Small Company Value......... 1.41% 12.14% 14.53% 14.28%
Managed..................... -1.44% 16.89% 17.43% 17.21%
International Growth........ 6.79% N/A N/A 8.61%
High Yield Bond............. -4.39% N/A N/A 8.71%
Intermediate Term Bond...... -0.55% 3.86% 6.34% 6.05%
Long Term Bond.............. 2.08% 6.34% 9.05% 8.40%
Government Securities....... -1.18% N/A N/A 4.30%
</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 Company Value 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. 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 Contractholder surrendered the Contract for cash, rather than
electing commencement of annuity benefits in the form of one of the Settlement
Options available, at the end of the period shown. The 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 and a deduction for the Annual Contract Charge
imposed on each Contract Anniversary and upon full surrender and allocated to
each Subaccount in the proportion that the total value of that Subaccount bore
to the total value of the Variable Account at the end of the period indicated.
(6)
<PAGE> 62
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
TOTAL RETURN
(ASSUMING $1,000 PAYMENT AT BEGINNING OF
PERIOD AND CONTRACT CONTINUES IN FORCE)
<TABLE>
<CAPTION>
FOR THE
FOR THE FOR THE FOR THE PERIOD SINCE
1 YEAR ENDED 5 YEARS ENDED 10 YEARS ENDED INCEPTION THROUGH
SUBACCOUNT DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998
---------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Equity...................... 7.80% 17.99% 15.55% 15.12%
Small Company Value......... 7.66% 12.65% 14.53% 14.28%
Managed..................... 4.82% 17.31% 17.43% 17.21%
International Growth........ 13.00% N/A N/A 9.48%
High Yield Bond............. 1.90% N/A N/A 9.57%
Intermediate Term Bond...... 5.71% 4.60% 6.34% 6.05%
Long Term Bond.............. 8.32% 7.01% 9.05% 8.40%
Government Securities....... 5.08% N/A N/A 5.32%
</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 Company Value 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. 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 a Contractholder would have received during that period if
he did not surrender his Contract.
In addition to the average annual total returns shown above, average annual
total returns may also be shown for the average purchase payment made by a
purchaser of the Contract. For 1997, this amount was $25,000. The following
tables show average annual total returns calculated on the same basis as the two
tables above, except that the purchase payment is $25,000.
(7)
<PAGE> 63
MONY AMERICA VARIABLE ACCOUNT A
TOTAL RETURN
(ASSUMING $25,000 PAYMENT AT BEGINNING OF
PERIOD AND SURRENDER AT END OF PERIOD)
<TABLE>
<CAPTION>
FOR THE
FOR THE FOR THE FOR THE PERIOD SINCE
1 YEAR ENDED 5 YEARS ENDED 10 YEARS ENDED INCEPTION THROUGH
SUBACCOUNT DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998
---------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Equity...................... 2.28% 18.14% 15.98% 15.55%
Small Company Value......... 2.00% 12.67% 14.90% 14.64%
Managed..................... 0.29% 18.22% 18.36% 18.11%
International Growth........ 7.19% N/A N/A 9.04%
High Yield Bond............. -4.00% N/A N/A 9.11%
Intermediate Term Bond...... -0.15% 4.24% 6.64% 6.32%
Long Term Bond.............. 2.49% 6.73% 9.33% 8.67%
Government Securities....... -0.74% N/A N/A 4.80%
</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 Company Value 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. Total return is not indicative
of future performance.
MONY AMERICA VARIABLE ACCOUNT A
TOTAL RETURN
(ASSUMING $25,000 PAYMENT AT BEGINNING OF
PERIOD AND CONTRACT CONTINUES IN FORCE)
<TABLE>
<CAPTION>
FOR THE
FOR THE FOR THE FOR THE PERIOD SINCE
1 YEAR ENDED 5 YEARS ENDED 10 YEARS ENDED INCEPTION THROUGH
SUBACCOUNT DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998
---------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Equity...................... 8.52% 18.53% 15.98% 15.55%
Small Company Value......... 8.25% 13.17% 14.90% 14.64%
Managed..................... 6.55% 18.61% 18.36% 18.11%
International Growth........ 13.39% N/A N/A 9.83%
High Yield Bond............. 2.29% N/A N/A 9.89%
Intermediate Term Bond...... 6.11% 4.97% 6.64% 6.32%
Long Term Bond.............. 8.72% 7.38% 9.33% 8.67%
Government Securities....... 5.52% N/A N/A 5.71%
</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 Company Value 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. Total return is not indicative
of future performance.
(8)
<PAGE> 64
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, 1998.................................. 4.83% 5.03% 3.39% 7.26%
</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 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.
(9)
<PAGE> 65
YEAR TO DATE TOTAL RETURN:
The tables below show total returns for the year to date (January 1, 1999
to February 12, 1999) which have not been annualized and which assume,
respectively, a $1,000 and a $25,000 payment made at the beginning of the period
and reflecting the same assumptions and results as the table appearing on 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
YEAR TO DATE TOTAL RETURN
JANUARY 1 TO FEBRUARY 12, 1999
(ASSUMING $1,000 PAYMENT AT BEGINNING OF PERIOD)
<TABLE>
<CAPTION>
SURRENDER AT CONTRACT CONTINUES
SUBACCOUNT END OF PERIOD IN FORCE
---------- ------------- ------------------
<S> <C> <C>
Equity................................................... -12.69% -5.60%
Managed.................................................. -12.09% -3.97%
Small Company Value...................................... -8.06% -1.14%
International Growth..................................... -8.96% -2.23%
High Yield Bond.......................................... -4.89% 1.80%
Intermediate Term Bond................................... -7.31% -0.59%
Long Term Bond........................................... -9.29% -2.55%
Government Securities.................................... -7.18% -0.42%
</TABLE>
MONY AMERICA VARIABLE ACCOUNT A
YEAR TO DATE TOTAL RETURN
JANUARY 1 TO FEBRUARY 12, 1999
(ASSUMING $25,000 PAYMENT AT BEGINNING OF PERIOD)
<TABLE>
<CAPTION>
SURRENDER AT CONTRACT CONTINUES
SUBACCOUNT END OF PERIOD IN FORCE
---------- ------------- ------------------
<S> <C> <C>
Equity................................................. -11.97% -5.60%
Managed................................................ -10.36% -3.97%
Small Company Value.................................... -7.47% -1.14%
International Growth................................... -8.56% -2.23%
High Yield Bond........................................ -4.51% 1.80%
Intermediate Term Bond................................. -6.91% -0.59%
Long Term Bond......................................... -8.88% -2.55%
Government Securities.................................. -6.74% -0.42%
</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.
(10)
<PAGE> 66
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,
1998................................................... F-3
Statements of operations for the year ended December 31,
1998................................................... F-6
Statements of changes in net assets for the years ended
December 31, 1998 and 1997............................. F-9
Notes to financial statements............................. F-13
With respect to MONY Life Insurance Company of America:
Report of Independent Accountants......................... F-17
Balance sheets as of December 31, 1998 and 1997........... F-18
Statements of income and comprehensive income for the
years ended December 31, 1998, 1997 and 1996........... F-19
Statements of changes in shareholder's equity for the
years ended December 31, 1998, 1997 and 1996........... F-20
Statements of cash flows for the years ended December 31,
1998, 1997 and 1996.................................... F-21
Notes to financial statements............................. F-23
</TABLE>
F-1
<PAGE> 67
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 -- MONYMaster/ValueMaster:
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting MONY America Variable Account A (comprising,
respectively, MONYMaster's Equity Growth, Equity Income, Intermediate Term Bond,
Long Term Bond, Diversified, Money Market, Government Securities, Equity, Small
Cap, Managed, International Growth and High Yield Bond Subaccounts; and
ValueMaster's Money Market, Bond, Equity, Small Cap and Managed Subaccounts) at
December 31, 1998, the results of each of their operations for the year then
ended and the changes in each of their net assets for each of the two years in
the period then ended, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the MONY Life
Insurance Company of America's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statement in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 12, 1999
F-2
<PAGE> 68
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONYMASTER
---------------------------------------------------------------------------------
MONY SERIES FUND, INC.
---------------------------------------------------------------------------------
EQUITY EQUITY INTERMEDIATE LONG TERM MONEY
GROWTH INCOME TERM BOND BOND DIVERSIFIED MARKET
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at cost
(Note 4)............ $1,095,208 $ 990,590 $45,468,273 $93,501,360 $1,274,454 $287,969,575
========== ========== =========== =========== ========== ============
Investments in MONY
Series Fund, Inc, at
net asset value
(Note 2)............ $1,576,054 $1,284,330 $47,321,829 $99,244,109 $1,570,366 $287,969,575
Amount due from MONY
America............. 0 0 811 1,689 0 776,721
Amount due from MONY
Series Fund, Inc.... 6 0 3,715 8,697 24 385,941
---------- ---------- ----------- ----------- ---------- ------------
Total assets.......... 1,576,060 1,284,330 47,326,355 99,254,495 1,570,390 289,132,237
---------- ---------- ----------- ----------- ---------- ------------
LIABILITIES
Amount due to MONY
America............. 6 0 3,715 8,697 24 385,941
Amount due to MONY
Series Fund, Inc.... 0 0 811 1,689 0 776,721
---------- ---------- ----------- ----------- ---------- ------------
Total liabilities..... 6 0 4,526 10,386 24 1,162,662
---------- ---------- ----------- ----------- ---------- ------------
Net assets............ $1,576,054 $1,284,330 $47,321,829 $99,244,109 $1,570,366 $287,969,575
========== ========== =========== =========== ========== ============
Net assets consist of:
Contractholders' net
payments.......... $ 34,828 $(242,836) $37,233,714 $75,575,668 $ (453,060) $263,648,620
Undistributed net
investment
income............ 453,653 705,765 7,506,305 13,658,824 1,053,187 24,320,955
Accumulated net
realized gain on
investments....... 606,727 527,661 728,254 4,266,868 674,327 0
Unrealized
appreciation of
investments....... 480,846 293,740 1,853,556 5,742,749 295,912 0
---------- ---------- ----------- ----------- ---------- ------------
Net assets............ $1,576,054 $1,284,330 $47,321,829 $99,244,109 $1,570,366 $287,969,575
========== ========== =========== =========== ========== ============
Number of units
outstanding*........ 31,847 30,115 2,414,529 4,000,596 42,575 18,280,159
---------- ---------- ----------- ----------- ---------- ------------
Net asset value per
unit outstanding*... $ 49.49 $ 42.65 $ 19.60 $ 24.81 $ 36.88 $ 15.75
========== ========== =========== =========== ========== ============
<CAPTION>
MONYMASTER VALUEMASTER
----------- -----------
MONY SERIES FUND, INC.
-------------------------
GOVERNMENT MONEY
SECURITIES MARKET
SUBACCOUNT SUBACCOUNT
----------- -----------
<S> <C> <C>
ASSETS
Investments at cost
(Note 4)............ $44,070,585 $1,960,142
=========== ==========
Investments in MONY
Series Fund, Inc, at
net asset value
(Note 2)............ $45,153,237 $1,960,142
Amount due from MONY
America............. 218 0
Amount due from MONY
Series Fund, Inc.... 1,694 0
----------- ----------
Total assets.......... 45,155,149 1,960,142
----------- ----------
LIABILITIES
Amount due to MONY
America............. 1,694 0
Amount due to MONY
Series Fund, Inc.... 218 0
----------- ----------
Total liabilities..... 1,912 0
----------- ----------
Net assets............ $45,153,237 $1,960,142
=========== ==========
Net assets consist of:
Contractholders' net
payments.......... $42,017,063 $ 794,806
Undistributed net
investment
income............ 1,002,007 1,165,336
Accumulated net
realized gain on
investments....... 1,051,515 0
Unrealized
appreciation of
investments....... 1,082,652 0
----------- ----------
Net assets............ $45,153,237 $1,960,142
=========== ==========
Number of units
outstanding*........ 3,591,602 136,239
----------- ----------
Net asset value per
unit outstanding*... $ 12.57 $ 14.39
=========== ==========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-3
<PAGE> 69
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONYMASTER
--------------------------------------------------------------------------
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)...... $476,064,032 $326,802,737 $2,160,672,479 $70,442,620 $90,084,355
============ ============ ============== =========== ===========
Investments in Enterprise
Accumulation Trust, at net asset
value (Note 2).................. $520,330,406 $343,222,741 $2,337,327,351 $72,940,289 $86,600,128
Amount due from MONY America...... 65,594 30,660 134,076 14,426 7,179
Amount due from Enterprise
Accumulation Trust.............. 65,199 44,373 398,823 6,653 2,134
------------ ------------ -------------- ----------- -----------
Total assets............ 520,461,199 343,297,774 2,337,860,250 72,961,368 86,609,441
------------ ------------ -------------- ----------- -----------
LIABILITIES
Amount due to MONY America........ 65,199 44,373 398,823 6,653 2,134
Amount due to Enterprise
Accumulation Trust.............. 65,594 30,660 134,076 14,426 7,179
------------ ------------ -------------- ----------- -----------
Total liabilities....... 130,793 75,033 532,899 21,079 9,313
------------ ------------ -------------- ----------- -----------
Net assets........................ $520,330,406 $343,222,741 $2,337,327,351 $72,940,289 $86,600,128
============ ============ ============== =========== ===========
Net assets consist of:
Contractholders' net payments... $324,570,335 $201,915,001 $1,155,833,644 $58,692,034 $76,764,119
Undistributed net investment
income....................... 36,377,321 56,458,082 319,223,689 4,292,243 11,920,109
Accumulated net realized gain on
investments.................. 115,116,376 68,429,654 685,615,146 7,458,343 1,400,127
Unrealized appreciation
(depreciation) of
investments.................. 44,266,374 16,420,004 176,654,872 2,497,669 (3,484,227)
------------ ------------ -------------- ----------- -----------
Net assets........................ $520,330,406 $343,222,741 $2,337,327,351 $72,940,289 $86,600,128
============ ============ ============== =========== ===========
Number of units outstanding*...... 11,629,793 8,392,405 41,556,499 4,954,694 5,868,866
------------ ------------ -------------- ----------- -----------
Net asset value per unit
outstanding*.................... $ 44.74 $ 40.90 $ 56.24 $ 14.72 $ 14.76
============ ============ ============== =========== ===========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-4
<PAGE> 70
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
VALUEMASTER
--------------------------------------------------
OCC ACCUMULATION TRUST
--------------------------------------------------
BOND EQUITY SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments at cost (Note 4).......................... $ 985,845 $1,534,077 $2,514,260 $25,902,309
========== ========== ========== ===========
Investments in OCC Accumulation Trust, at net asset
value (Note 2)...................................... $ 976,393 $2,493,448 $2,745,853 $37,060,540
---------- ---------- ---------- -----------
Net assets............................................ $ 976,393 $2,493,448 $2,745,853 $37,060,540
========== ========== ========== ===========
Net assets consist of:
Contractholders' net payments....................... $ (457,601) $ 174,107 $1,477,714 $ 3,625,134
Undistributed net investment income................. 1,354,328 226,982 292,232 2,621,890
Accumulated net realized gain on investments........ 89,118 1,132,988 744,314 19,655,285
Unrealized appreciation (depreciation) of
investments...................................... (9,452) 959,371 231,593 11,158,231
---------- ---------- ---------- -----------
Net assets............................................ $ 976,393 $2,493,448 $2,745,853 $37,060,540
========== ========== ========== ===========
Number of units outstanding*.......................... 53,421 55,058 88,120 685,762
---------- ---------- ---------- -----------
Net asset value per unit outstanding*................. $ 18.28 $ 45.29 $ 31.16 $ 54.04
========== ========== ========== ===========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-5
<PAGE> 71
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONYMASTER
-----------------------------------------------------------------------------------
MONY SERIES FUND, INC.
-----------------------------------------------------------------------------------
EQUITY EQUITY INTERMEDIATE LONG TERM MONEY
GROWTH INCOME TERM BOND BOND DIVERSIFIED MARKET
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dividend income........ $243,469 $202,165 $ 2,012,440 $ 3,580,527 $341,271 $ 10,992,296
Mortality and expense
risk charges (Note
3)................... (18,396) (15,934) (518,129) (934,766) (19,001) (2,682,406)
-------- -------- ------------ ------------ -------- -------------
Net investment
income............... 225,073 186,231 1,494,311 2,645,761 322,270 8,309,890
-------- -------- ------------ ------------ -------- -------------
Realized and unrealized
gain (loss) on
investments (Note 2):
Proceeds from
sales.............. 294,465 345,314 12,538,512 29,950,047 479,928 983,363,941
Cost of shares
sold............... (162,533) (190,440) (11,650,314) (26,712,928) (323,032) (983,363,941)
-------- -------- ------------ ------------ -------- -------------
Net realized gain on
investments.......... 131,932 154,874 888,198 3,237,119 156,896 0
Net increase (decrease)
in unrealized
appreciation of
investments.......... (34,914) (198,816) 76,556 71,611 (192,414) 0
-------- -------- ------------ ------------ -------- -------------
Net realized and
unrealized gain
(loss) on
investments.......... 97,018 (43,942) 964,754 3,308,730 (35,518) 0
-------- -------- ------------ ------------ -------- -------------
Net increase in net
assets resulting from
operations........... $322,091 $142,289 $ 2,459,065 $ 5,954,491 $286,752 $ 8,309,890
======== ======== ============ ============ ======== =============
<CAPTION>
MONYMASTER VALUEMASTER
------------ -----------
MONY SERIES FUND, INC.
--------------------------
GOVERNMENT MONEY
SECURITIES MARKET
SUBACCOUNT SUBACCOUNT
------------ -----------
<S> <C> <C>
Dividend income........ $ 914,254 $ 107,698
Mortality and expense
risk charges (Note
3)................... (365,088) (29,951)
------------ -----------
Net investment
income............... 549,166 77,747
------------ -----------
Realized and unrealized
gain (loss) on
investments (Note 2):
Proceeds from
sales.............. 12,958,571 6,671,197
Cost of shares
sold............... (12,184,627) (6,671,197)
------------ -----------
Net realized gain on
investments.......... 773,944 0
Net increase (decrease)
in unrealized
appreciation of
investments.......... 207,004 0
------------ -----------
Net realized and
unrealized gain
(loss) on
investments.......... 980,948 0
------------ -----------
Net increase in net
assets resulting from
operations........... $ 1,530,114 $ 77,747
============ ===========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 72
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONYMASTER
---------------------------------------------------------------------------
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................... $ 23,066,301 $ 21,494,374 $ 185,172,973 $ 3,535,382 $ 7,267,485
Mortality and expense risk charges
(Note 3)........................ (6,030,705) (4,280,171) (29,832,916) (871,380) (927,236)
------------- ------------ ------------- ------------ ------------
Net investment income............. 17,035,596 17,214,203 155,340,057 2,664,002 6,340,249
------------- ------------ ------------- ------------ ------------
Realized and unrealized gain on
investments (Note 2):
Proceeds from sales............. 175,899,925 147,256,852 826,691,895 26,948,427 19,789,101
Cost of shares sold............. (115,598,723) (98,238,561) (492,341,730) (23,736,365) (19,102,451)
------------- ------------ ------------- ------------ ------------
Net realized gain on
investments..................... 60,301,202 49,018,291 334,350,165 3,212,062 686,650
Net increase (decrease) in
unrealized appreciation of
investments..................... (43,212,812) (45,383,177) (358,930,321) 1,983,502 (5,646,150)
------------- ------------ ------------- ------------ ------------
Net realized and unrealized gain
(loss) on investments........... 17,088,390 3,635,114 (24,580,156) 5,195,564 (4,959,500)
------------- ------------ ------------- ------------ ------------
Net increase in net assets
resulting from operations....... $ 34,123,986 $ 20,849,317 $ 130,759,901 $ 7,859,566 $ 1,380,749
============= ============ ============= ============ ============
</TABLE>
See notes to financial statements.
F-7
<PAGE> 73
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
VALUEMASTER
----------------------------------------------------
OCC ACCUMULATION TRUST
----------------------------------------------------
BOND EQUITY SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Dividend income....................................... $ 68,859 $ 165,930 $ 163,330 $ 1,747,891
Mortality and expense risk charges (Note 3)........... (13,722) (35,545) (42,474) (527,494)
----------- ---------- ----------- -----------
Net investment income................................. 55,137 130,385 120,856 1,220,397
----------- ---------- ----------- -----------
Realized and unrealized gain (loss) on investments
(Note 2):
Proceeds from sales................................. 1,658,832 1,050,116 1,675,892 16,754,576
Cost of shares sold................................. (1,597,966) (522,723) (1,215,144) (8,450,480)
----------- ---------- ----------- -----------
Net realized gain on investments...................... 60,866 527,393 460,748 8,304,096
Net decrease in unrealized appreciation of
investments......................................... (42,129) (370,869) (935,652) (6,813,165)
----------- ---------- ----------- -----------
Net realized and unrealized gain (loss) on
investments......................................... 18,737 156,524 (474,904) 1,490,931
----------- ---------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations.......................................... $ 73,874 $ 286,909 $ (354,048) $ 2,711,328
=========== ========== =========== ===========
</TABLE>
See notes to financial statements.
F-8
<PAGE> 74
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONYMASTER
-------------------------------------------------
MONY SERIES FUND, INC.
-------------------------------------------------
EQUITY GROWTH EQUITY INCOME
SUBACCOUNT SUBACCOUNT
----------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
From operations:
Net investment income................................ $ 225,073 $ 88,958 $ 186,231 $ 131,018
Net realized gain on investments..................... 131,932 21,769 154,874 106,897
Net increase (decrease) in unrealized appreciation of
investments........................................ (34,914) 228,905 (198,816) 112,714
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations... 322,091 339,632 142,289 350,629
---------- ---------- ---------- ----------
From unit transactions:
Net proceeds from the issuance of units.............. 29,672 64,958 33,985 10,553
Net asset value of units redeemed or used to meet
contract obligations............................... (276,074) (18,731) (329,978) (196,802)
---------- ---------- ---------- ----------
Net increase (decrease) from unit transactions......... (246,402) 46,227 (295,993) (186,249)
---------- ---------- ---------- ----------
Net increase in net assets............................. 75,689 385,859 (153,704) 164,380
Net assets beginning of year........................... 1,500,365 1,114,506 1,438,034 1,273,654
---------- ---------- ---------- ----------
Net assets end of year*................................ $1,576,054 $1,500,365 $1,284,330 $1,438,034
========== ========== ========== ==========
Units outstanding beginning of year.................... 37,580 36,033 37,519 43,089
Units issued during the year........................... 679 1,961 802 353
Units redeemed during the year......................... (6,412) (414) (8,206) (5,923)
---------- ---------- ---------- ----------
Units outstanding end of year.......................... 31,847 37,580 30,115 37,519
========== ========== ========== ==========
- ---------------
* Includes undistributed net investment income of: $ 453,653 $ 228,580 $ 705,765 $ 519,534
<CAPTION>
MONYMASTER
--------------------------------------------------------
MONY SERIES FUND, INC.
--------------------------------------------------------
INTERMEDIATE TERM BOND LONG TERM BOND
SUBACCOUNT SUBACCOUNT
-------------------------- ---------------------------
1998 1997 1998 1997
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
From operations:
Net investment income................................ $ 1,494,311 $ 1,467,821 $ 2,645,761 $ 2,470,718
Net realized gain on investments..................... 888,198 286,935 3,237,119 1,467,041
Net increase (decrease) in unrealized appreciation of
investments........................................ 76,556 383,054 71,611 2,326,867
------------ ----------- ------------ ------------
Net increase in net assets resulting from operations... 2,459,065 2,137,810 5,954,491 6,264,626
------------ ----------- ------------ ------------
From unit transactions:
Net proceeds from the issuance of units.............. 20,238,046 7,883,206 60,292,920 13,719,649
Net asset value of units redeemed or used to meet
contract obligations............................... (11,236,483) (7,423,806) (27,360,952) (10,658,828)
------------ ----------- ------------ ------------
Net increase (decrease) from unit transactions......... 9,001,563 459,400 32,931,968 3,060,821
------------ ----------- ------------ ------------
Net increase in net assets............................. 11,460,628 2,597,210 38,886,459 9,325,447
Net assets beginning of year........................... 35,861,201 33,263,991 60,357,650 51,032,203
------------ ----------- ------------ ------------
Net assets end of year*................................ $ 47,321,829 $35,861,201 $ 99,244,109 $ 60,357,650
============ =========== ============ ============
Units outstanding beginning of year.................... 1,941,792 1,916,050 2,645,732 2,506,531
Units issued during the year........................... 1,055,742 444,683 2,492,768 653,780
Units redeemed during the year......................... (583,005) (418,941) (1,137,904) (514,579)
------------ ----------- ------------ ------------
Units outstanding end of year.......................... 2,414,529 1,941,792 4,000,596 2,645,732
============ =========== ============ ============
- ---------------
* Includes undistributed net investment income of: $ 7,506,305 $ 6,011,994 $ 13,658,824 $ 11,013,063
</TABLE>
See notes to financial statements.
F-9
<PAGE> 75
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONYMASTER
-----------------------------------------------------------------------
MONY SERIES FUND, INC.
-----------------------------------------------------------------------
GOVERNMENT
DIVERSIFIED MONEY MARKET SECURITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------------- ------------------------------ ------------
1998 1997 1998 1997 1998
---------- ---------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
From operations:
Net investment income............................ $ 322,270 $ 123,011 $ 8,309,890 $ 5,143,017 $ 549,166
Net realized gain on investments................. 156,896 233,594 0 0 773,944
Net increase (decrease) in unrealized
appreciation of investments.................... (192,414) 41,876 0 0 207,004
---------- ---------- -------------- ------------- ------------
Net increase in net assets resulting from
operations....................................... 286,752 398,481 8,309,890 5,143,017 1,530,114
---------- ---------- -------------- ------------- ------------
From unit transactions:
Net proceeds from the issuance of units.......... 71,356 42,121 1,105,652,600 771,270,721 34,260,541
Net asset value of units redeemed or used to meet
contract obligations........................... (461,042) (634,220) (956,073,355) (766,971,962) (11,620,889)
---------- ---------- -------------- ------------- ------------
Net increase (decrease) from unit transactions..... (389,686) (592,099) 149,579,245 4,298,759 22,639,652
---------- ---------- -------------- ------------- ------------
Net increase (decrease) in net assets.............. (102,934) (193,618) 157,889,135 9,441,776 24,169,766
Net assets beginning of year....................... 1,673,300 1,866,918 130,080,440 120,638,664 20,983,471
---------- ---------- -------------- ------------- ------------
Net assets end of year*............................ $1,570,366 $1,673,300 $ 287,969,575 $ 130,080,440 $ 45,153,237
========== ========== ============== ============= ============
Units outstanding beginning of year................ 55,440 76,353 8,585,010 8,278,977 1,761,542
Units issued during the year....................... 2,111 1,688 71,354,491 51,933,520 2,769,576
Units redeemed during the year..................... (14,976) (22,601) (61,659,342) (51,627,487) (939,516)
---------- ---------- -------------- ------------- ------------
Units outstanding end of year...................... 42,575 55,440 18,280,159 8,585,010 3,591,602
========== ========== ============== ============= ============
- ---------------
* Includes undistributed net investment income of: $1,053,187 $ 730,917 $ 24,320,955 $ 16,011,065 $ 1,002,007
<CAPTION>
MONYMASTER VALUEMASTER
----------- -------------------------
MONY SERIES FUND, INC.
---------------------------------------
GOVERNMENT
SECURITIES MONEY MARKET
SUBACCOUNT SUBACCOUNT
----------- -------------------------
1997 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
From operations:
Net investment income............................ $ 393,034 $ 77,747 $ 84,261
Net realized gain on investments................. 92,136 0 0
Net increase (decrease) in unrealized
appreciation of investments.................... 518,951 0 0
----------- ----------- -----------
Net increase in net assets resulting from
operations....................................... 1,004,121 77,747 84,261
----------- ----------- -----------
From unit transactions:
Net proceeds from the issuance of units.......... 9,322,729 4,927,649 3,559,696
Net asset value of units redeemed or used to meet
contract obligations........................... (3,626,150) (4,747,240) (5,555,831)
----------- ----------- -----------
Net increase (decrease) from unit transactions..... 5,696,579 180,409 (1,996,135)
----------- ----------- -----------
Net increase (decrease) in net assets.............. 6,700,700 258,156 (1,911,874)
Net assets beginning of year....................... 14,282,771 1,701,986 3,613,860
----------- ----------- -----------
Net assets end of year*............................ $20,983,471 $ 1,960,142 $ 1,701,986
=========== =========== ===========
Units outstanding beginning of year................ 1,269,214 122,178 268,258
Units issued during the year....................... 807,156 347,333 258,478
Units redeemed during the year..................... (314,828) (333,272) (404,558)
----------- ----------- -----------
Units outstanding end of year...................... 1,761,542 136,239 122,178
=========== =========== ===========
- ---------------
* Includes undistributed net investment income of: $ 452,841 $ 404,185 $ 326,438
</TABLE>
See notes to financial statements.
F-10
<PAGE> 76
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONYMASTER
----------------------------------------------------------------------------
ENTERPRISE ACCUMULATION TRUST
----------------------------------------------------------------------------
EQUITY SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------------------- ---------------------------- --------------
1998 1997 1998 1997 1998
------------- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
From operations:
Net investment income.......................... $ 17,035,596 $ 10,134,835 $ 17,214,203 $ 24,100,179 $ 155,340,057
Net realized gain on investments............... 60,301,202 31,547,377 49,018,291 12,200,856 334,350,165
Net increase (decrease) in unrealized
appreciation of investments.................. (43,212,812) 34,785,044 (45,383,177) 43,551,752 (358,930,321)
------------- ------------ ------------- ------------ --------------
Net increase in net assets resulting from
operations..................................... 34,123,986 76,467,256 20,849,317 79,852,787 130,759,901
------------- ------------ ------------- ------------ --------------
From unit transactions:
Net proceeds from the issuance of units........ 208,152,834 153,834,908 143,928,984 103,297,248 669,500,974
Net asset value of units redeemed or used to
meet contract obligations.................... (163,245,612) (61,472,849) (138,895,329) (33,906,004) (775,855,076)
------------- ------------ ------------- ------------ --------------
Net increase from unit transactions............. 44,907,222 92,362,059 5,033,655 69,391,244 (106,354,102)
------------- ------------ ------------- ------------ --------------
Net increase in net assets...................... 79,031,208 168,829,315 25,882,972 149,244,031 24,405,799
Net assets beginning of year.................... 441,299,198 272,469,883 317,339,769 168,095,738 2,312,921,552
------------- ------------ ------------- ------------ --------------
Net assets end of year*......................... $ 520,330,406 $441,299,198 $ 343,222,741 $317,339,769 $2,337,327,351
============= ============ ============= ============ ==============
Units outstanding beginning of year............. 10,706,757 8,212,227 8,401,211 6,346,453 43,843,754
Units issued during the year.................... 4,840,471 4,173,627 3,677,232 3,110,995 12,310,620
Units redeemed during the year.................. (3,917,435) (1,679,097) (3,686,038) (1,056,237) (14,597,875)
------------- ------------ ------------- ------------ --------------
Units outstanding end of year................... 11,629,793 10,706,757 8,392,405 8,401,211 41,556,499
============= ============ ============= ============ ==============
- ---------------
* Includes undistributed net investment income
of: $ 36,377,321 $ 19,341,725 $ 56,458,082 $ 39,243,879 $ 319,223,689
<CAPTION>
MONYMASTER
-------------------------------------------------------------------------
ENTERPRISE ACCUMULATION TRUST
-------------------------------------------------------------------------
MANAGED INTERNATIONAL GROWTH HIGH YIELD BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------- --------------------------- --------------------------
1997 1998 1997 1998 1997
-------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
From operations:
Net investment income.......................... $ 79,408,406 $ 2,664,002 $ 1,171,619 $ 6,340,249 $ 3,449,870
Net realized gain on investments............... 202,106,289 3,212,062 3,166,636 686,650 461,482
Net increase (decrease) in unrealized
appreciation of investments.................. 125,071,710 1,983,502 (3,024,032) (5,646,150) 1,157,688
-------------- ------------ ------------ ------------ -----------
Net increase in net assets resulting from
operations..................................... 406,586,405 7,859,566 1,314,223 1,380,749 5,069,040
-------------- ------------ ------------ ------------ -----------
From unit transactions:
Net proceeds from the issuance of units........ 626,988,679 24,902,914 35,179,809 44,173,041 30,370,695
Net asset value of units redeemed or used to
meet contract obligations.................... (409,563,542) (24,998,725) (16,397,762) (17,825,323) (6,983,741)
-------------- ------------ ------------ ------------ -----------
Net increase from unit transactions............. 217,425,137 (95,811) 18,782,047 26,347,718 23,386,954
-------------- ------------ ------------ ------------ -----------
Net increase in net assets...................... 624,011,542 7,763,755 20,096,270 27,728,467 28,455,994
Net assets beginning of year.................... 1,688,910,010 65,176,534 45,080,264 58,871,661 30,415,667
-------------- ------------ ------------ ------------ -----------
Net assets end of year*......................... $2,312,921,552 $ 72,940,289 $ 65,176,534 $ 86,600,128 $58,871,661
============== ============ ============ ============ ===========
Units outstanding beginning of year............. 39,371,381 5,021,078 3,610,923 4,081,656 2,361,710
Units issued during the year.................... 13,252,564 1,790,119 2,649,674 3,012,678 2,234,031
Units redeemed during the year.................. (8,780,191) (1,856,503) (1,239,519) (1,225,468) (514,085)
-------------- ------------ ------------ ------------ -----------
Units outstanding end of year................... 43,843,754 4,954,694 5,021,078 5,868,866 4,081,656
============== ============ ============ ============ ===========
- ---------------
* Includes undistributed net investment income
of: $ 163,883,632 $ 4,292,243 $ 1,628,241 $ 11,920,109 $ 5,579,860
</TABLE>
See notes to financial statements.
F-11
<PAGE> 77
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
VALUEMASTER
---------------------------------------------------------------------------
OCC ACCUMULATION TRUST
---------------------------------------------------------------------------
BOND EQUITY SMALL CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------------- ----------------------- -----------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income............. $ 55,137 $ 82,928 $ 130,385 $ 85,330 $ 120,856 $ 113,545
Net realized gain (loss) on
investments..................... 60,866 (17,195) 527,393 291,249 460,748 105,416
Net increase (decrease) in
unrealized appreciation of
investments..................... (42,129) 22,568 (370,869) 311,925 (935,652) 482,224
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from
operations........................ 73,874 88,301 286,909 688,504 (354,048) 701,185
---------- ---------- ---------- ---------- ---------- ----------
From unit transactions:
Net proceeds from the issuance of
units........................... 1,261,119 206,205 181,362 94,191 644,248 273,519
Net asset value of units redeemed
or used to meet contract
obligations..................... (1,645,115) (936,786) (1,024,747) (607,309) (1,633,006) (338,142)
---------- ---------- ---------- ---------- ---------- ----------
Net decrease from unit
transactions...................... (383,996) (730,581) (843,385) (513,118) (988,758) (64,623)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets............................ (310,122) (642,280) (556,476) 175,386 (1,342,806) 636,562
Net assets beginning of year....... 1,286,515 1,928,795 3,049,924 2,874,538 4,088,659 3,452,097
---------- ---------- ---------- ---------- ---------- ----------
Net assets end of year*............ $ 976,393 $1,286,515 $2,493,448 $3,049,924 $2,745,853 $4,088,659
========== ========== ========== ========== ========== ==========
Units outstanding beginning of
year.............................. 75,192 118,986 74,411 87,730 117,879 120,183
Units issued during the year....... 70,341 12,934 3,895 2,620 18,913 8,340
Units redeemed during the year..... (92,112) (56,728) (23,248) (15,939) (48,672) (10,644)
---------- ---------- ---------- ---------- ---------- ----------
Units outstanding end of year...... 53,421 75,192 55,058 74,411 88,120 117,879
========== ========== ========== ========== ========== ==========
- ---------------
* Includes undistributed net
investment income of: $ 408,838 $ 353,701 $ 226,982 $ 96,597 $ 292,232 $ 171,376
<CAPTION>
VALUEMASTER
---------------------------
OCC ACCUMULATION TRUST
---------------------------
MANAGED
SUBACCOUNT
---------------------------
1998 1997
------------ ------------
<S> <C> <C>
From operations:
Net investment income............. $ 1,220,397 $ 1,391,969
Net realized gain (loss) on
investments..................... 8,304,096 5,761,094
Net increase (decrease) in
unrealized appreciation of
investments..................... (6,813,165) 1,865,204
------------ ------------
Net increase (decrease) in net
assets resulting from
operations........................ 2,711,328 9,018,267
------------ ------------
From unit transactions:
Net proceeds from the issuance of
units........................... 2,807,780 4,748,474
Net asset value of units redeemed
or used to meet contract
obligations..................... (16,067,125) (12,013,129)
------------ ------------
Net decrease from unit
transactions...................... (13,259,345) (7,264,655)
------------ ------------
Net increase (decrease) in net
assets............................ (10,548,017) 1,753,612
Net assets beginning of year....... 47,608,557 45,854,945
------------ ------------
Net assets end of year*............ $ 37,060,540 $ 47,608,557
============ ============
Units outstanding beginning of
year.............................. 932,054 1,084,412
Units issued during the year....... 54,133 98,535
Units redeemed during the year..... (300,425) (250,893)
------------ ------------
Units outstanding end of year...... 685,762 932,054
============ ============
- ---------------
* Includes undistributed net
investment income of: $ 2,621,890 $ 1,401,493
</TABLE>
See notes to financial statements.
F-12
<PAGE> 78
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
(MONYMaster, ValueMaster and MONY Custom Master). These policies are issued by
MONY America, which is a wholly-owned subsidiary of MONY Life Insurance Company
("MONY"). For presentation purposes, the information related only to MONYMaster
and ValueMaster insurance policies is presented here.
There are currently twelve MONYMaster subaccounts and five ValueMaster
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") (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.
On December 21, 1998, the Variable Account effected a substitution by
redeeming shares of the OCC Accumulation Trust Money Market Portfolio and using
the redemption proceeds to purchase shares of the MONY Series Fund, Inc. Money
Market 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 hereinafter, and should be
read in conjunction with these financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
Investments:
The investment in shares of each of the respective Funds' portfolios is
stated at value which is 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.
F-13
<PAGE> 79
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. RELATED PARTY TRANSACTIONS (CONTINUED)
Purchase payments received from MONY America by the Variable Account
represent gross purchase payments recorded by MONY America less deductions
retained for any premium taxes.
A periodic deduction is made from the cash value of the contract for the
Annual Contract Charge. The deduction is for the expenses of administration and
is treated by the Variable Account as a contractholder redemption. The amount
deducted for the MONYMaster and ValueMaster subaccounts for 1998 aggregated
$2,478,516.
MONY America receives from the Variable Account the amounts deducted for
mortality and expense risks at an annual rate of 1.25 percent of the average
daily net assets of the subaccounts. 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
Investments in MONY Series Fund, Inc. at cost, at December 31, 1998 consist
of the following:
<TABLE>
<CAPTION>
MONYMASTER
-----------------------------------------------------------------------------------
MONY SERIES FUND, INC.
-----------------------------------------------------------------------------------
EQUITY EQUITY INTERMEDIATE LONG TERM MONEY
GROWTH INCOME TERM BOND BOND DIVERSIFIED MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- ------------ ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Shares beginning of
year:
Shares............. 41,584 53,064 3,224,928 4,425,048 81,189 130,080,440
Amount............. $ 984,605 $ 945,478 $ 34,084,201 $ 54,686,512 $1,184,974 $ 130,080,440
---------- --------- ------------ ------------ ---------- --------------
Shares acquired:
Shares............. 852 1,277 1,888,240 4,472,816 3,637 1,130,260,780
Amount............. $ 29,667 $ 33,387 $ 21,021,946 $ 61,947,249 $ 71,241 $1,130,260,780
Shares received for
reinvestment of
dividends:
Shares............. 7,190 7,830 187,903 275,002 19,314 10,992,296
Amount............. $ 243,469 $ 202,165 $ 2,012,440 $ 3,580,527 $ 341,271 $ 10,992,296
Shares redeemed:
Shares............. (8,368) (12,678) (1,124,387) (2,169,047) (25,267) (983,363,941)
Amount............. $ (162,533) $(190,440) $(11,650,314) $(26,712,928) $ (323,032) $ (983,363,941)
---------- --------- ------------ ------------ ---------- --------------
Net change:
Shares............. (326) (3,571) 951,756 2,578,771 (2,316) 157,889,135
Amount............. $ 110,603 $ 45,112 $ 11,384,072 $ 38,814,848 $ 89,480 $ 157,889,135
---------- --------- ------------ ------------ ---------- --------------
Shares end of year:
Shares............. 41,258 49,493 4,176,684 7,003,819 78,873 287,969,575
Amount............. $1,095,208 $ 990,590 $ 45,468,273 $ 93,501,360 $1,274,454 $ 287,969,575
========== ========= ============ ============ ========== ==============
<CAPTION>
MONYMASTER VALUEMASTER
------------ -----------
MONY SERIES FUND, INC.
--------------------------
GOVERNMENT MONEY
SECURITIES MARKET
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
Shares beginning of
year:
Shares............. 1,926,857 0
Amount............. $ 20,107,823 $ 0
------------ ----------
Shares acquired:
Shares............. 3,206,904 1,967,858
Amount............. $ 35,233,135 $1,967,858
Shares received for
reinvestment of
dividends:
Shares............. 86,413 2,547
Amount............. $ 914,254 $ 2,547
Shares redeemed:
Shares............. (1,177,807) (10,263)
Amount............. $(12,184,627) $ (10,263)
------------ ----------
Net change:
Shares............. 2,115,510 1,960,142
Amount............. $ 23,962,762 $1,960,142
------------ ----------
Shares end of year:
Shares............. 4,042,367 1,960,142
Amount............. $ 44,070,585 $1,960,142
============ ==========
</TABLE>
F-14
<PAGE> 80
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENTS (CONTINUED)
Investments in Enterprise Accumulation Trust at cost, at December 31, 1998
consist of the following:
<TABLE>
<CAPTION>
MONYMASTER
------------------------------------------------------------------------------
ENTERPRISE ACCUMULATION TRUST
------------------------------------------------------------------------------
INTERNATIONAL HIGH YIELD
EQUITY SMALL CAP MANAGED GROWTH BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Shares beginning of year:
Shares.............................. 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
------------- ------------- --------------- ------------ ------------
Shares acquired:
Shares.............................. 5,834,944 5,328,833 16,356,957 3,899,488 8,087,770
Amount.............................. $ 214,776,442 $ 148,010,336 $ 690,504,877 $ 25,981,236 $ 45,209,583
Shares received for reinvestment of
dividends:
Shares.............................. 628,852 820,709 4,565,409 544,743 1,320,477
Amount.............................. $ 23,066,301 $ 21,494,374 $ 185,172,973 $ 3,535,382 $ 7,267,485
Shares redeemed:
Shares.............................. (4,908,273) (5,490,236) (20,013,010) (4,168,595) (3,591,867)
Amount.............................. $(115,598,723) $ (98,238,561) $ (492,341,730) $(23,736,365) $(19,102,451)
------------- ------------- --------------- ------------ ------------
Net change:
Shares.............................. 1,555,523 659,306 909,356 275,636 5,816,380
Amount.............................. $ 122,244,020 $ 71,266,149 $ 383,336,120 $ 5,780,253 $ 33,374,617
------------- ------------- --------------- ------------ ------------
Shares end of year:
Shares.............................. 14,131,732 12,544,691 57,626,414 10,822,001 16,126,653
Amount.............................. $ 476,064,032 $ 326,802,737 $ 2,160,672,479 $ 70,442,620 $ 90,084,355
============= ============= =============== ============ ============
</TABLE>
F-15
<PAGE> 81
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENTS (CONTINUED)
Investments in OCC Accumulation Trust at cost, at December 31, 1998 consist
of the following:
<TABLE>
<CAPTION>
VALUEMASTER
---------------------------------------------------------------------
OCC ACCUMULATION TRUST
---------------------------------------------------------------------
US GOVERNMENT
MONEY MARKET INCOME EQUITY SMALL CAP MANAGED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Shares beginning of year:
Shares.................................... 1,701,986 122,409 83,514 155,049 1,123,373
Amount.................................... $ 1,701,986 $ 1,253,838 $1,719,684 $ 2,921,414 $29,637,161
----------- ----------- ---------- ----------- -----------
Shares acquired:
Shares.................................... 4,853,797 117,535 4,559 27,187 71,173
Amount.................................... $ 4,853,797 $ 1,261,114 $ 171,186 $ 644,660 $ 2,967,737
Shares received for reinvestment of
dividends:
Shares.................................... 105,151 6,465 4,506 6,108 40,382
Amount.................................... $ 105,151 $ 68,859 $ 165,930 $ 163,330 $ 1,747,891
Shares redeemed:
Shares.................................... (6,660,934) (154,815) (28,149) (69,476) (387,637)
Amount.................................... $(6,660,934) $(1,597,966) $ (522,723) $(1,215,144) $(8,450,480)
----------- ----------- ---------- ----------- -----------
Net change:
Shares.................................... (1,701,986) (30,815) (19,084) (36,181) (276,082)
Amount.................................... $(1,701,986) $ (267,993) $ (185,607) $ (407,154) $(3,734,852)
----------- ----------- ---------- ----------- -----------
Shares end of year:
Shares.................................... 0 91,594 64,430 118,868 847,291
Amount.................................... $ 0 $ 985,845 $1,534,077 $ 2,514,260 $25,902,309
=========== =========== ========== =========== ===========
</TABLE>
F-16
<PAGE> 82
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MONY Life Insurance Company of America
In our opinion, the accompanying balance sheets and the related statements
of income and comprehensive income, changes in shareholder's equity and cash
flows present fairly, in all material respects, the financial position of MONY
Life Insurance Company of America (the "Company") at December 31, 1998 and 1997,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 2 to the financial statements, the Company adopted in
1996, Statements of Financial Accounting Standards No. 120 (SFAS 120) and
Statements of Financial Accounting Standards Board Interpretation No. 40 (FIN
40) which required implementation of several accounting pronouncements not
previously adopted. The effects of adopting SFAS 120 and FIN 40 were
retroactively applied to the Company's previously issued financial statements,
consistent with the implementation guidance of those standards.
PricewaterhouseCoopers LLP
New York, New York
February 15, 1999, except for Note 12(b),
as to which the date is March 22, 1999.
F-17
<PAGE> 83
MONY LIFE INSURANCE COMPANY OF AMERICA
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
-------- --------
($ IN MILLIONS)
<S> <C> <C>
ASSETS
INVESTMENTS:
Fixed maturity securities available-for-sale, at fair
value..................................................... $1,044.2 $1,099.4
Mortgage loans on real estate (Note 8)...................... 120.1 132.5
Policy loans................................................ 52.1 45.9
Real estate to be disposed of (Note 8)...................... 0.0 19.2
Real estate held for investment (Note 8).................... 8.3 2.8
Other invested assets....................................... 4.7 5.1
-------- --------
1,229.4 1,304.9
======== ========
Cash and cash equivalents................................... 133.4 46.0
Accrued investment income................................... 19.5 22.4
Amounts due from reinsurers................................. 24.4 13.0
Deferred policy acquisition costs........................... 318.6 281.6
Other assets................................................ 15.3 16.9
Separate account assets..................................... 4,148.8 3,606.7
-------- --------
Total assets...................................... $5,889.4 $5,291.5
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Future policy benefits...................................... $ 112.0 $ 106.1
Policyholders' account balances............................. 1,187.1 1,215.7
Other policyholders' liabilities............................ 56.9 41.2
Accounts payable and other liabilities...................... 67.9 34.5
Current federal income taxes payable........................ 13.2 17.8
Deferred federal income taxes (Note 5)...................... 13.7 7.5
Separate account liabilities................................ 4,148.8 3,606.7
-------- --------
Total liabilities................................. 5,599.6 5,029.5
Commitments and contingencies (Note 12)
Common stock $1.00 par value; 5,000,000 shares authorized,
2,500,000 issued and outstanding.......................... 2.5 2.5
Capital in excess of par.................................... 189.7 177.2
Retained earnings........................................... 89.6 75.4
Accumulated other comprehensive income...................... 8.0 6.9
-------- --------
Total shareholder's equity........................ 289.8 262.0
-------- --------
Total liabilities and shareholder's equity........ $5,889.4 $5,291.5
======== ========
</TABLE>
See accompanying notes to financial statements.
F-18
<PAGE> 84
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
($ IN MILLIONS)
<S> <C> <C> <C>
REVENUES:
Universal life and investment-type product policy fees...... $122.0 $100.8 $ 80.8
Premiums.................................................... 1.7 0.1 0.0
Net investment income (Note 6).............................. 94.6 99.1 102.0
Net realized gains on investments (Note 6).................. 7.1 2.7 0.9
Other income................................................ 7.6 5.5 4.8
------ ------ ------
233.0 208.2 188.5
------ ------ ------
BENEFITS AND EXPENSES:
Benefits to policyholders................................... 34.9 30.6 26.4
Interest credited to policyholders' account balances........ 65.1 72.5 73.0
Amortization of deferred policy acquisition costs........... 35.5 46.3 36.6
Other operating costs and expenses.......................... 75.6 46.0 39.4
------ ------ ------
211.1 195.4 175.4
------ ------ ------
Income before income taxes.................................. 21.9 12.8 13.1
Income tax expense.......................................... 7.7 4.5 4.6
------ ------ ------
Net income.................................................. 14.2 8.3 8.5
Other comprehensive income, net (Note 6).................... 1.1 3.3 (5.8)
------ ------ ------
Comprehensive income........................................ $ 15.3 $ 11.6 $ 2.7
====== ====== ======
</TABLE>
See accompanying notes to financial statements.
F-19
<PAGE> 85
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
ACCUMULATED
CAPITAL OTHER TOTAL
COMMON IN EXCESS RETAINED COMPREHENSIVE SHAREHOLDER'S
STOCK OF PAR EARNINGS INCOME EQUITY
------ --------- -------- ------------- ---------------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995............. $2.5 $153.0 $ 58.6 $ 9.4 $223.5
Capital contribution................... 13.4 13.4
Comprehensive income
Net income........................... 8.5 8.5
Other comprehensive income:
Unrealized gains on investments,
net of unrealized losses,
reclassification adjustments,
and taxes (Note 6).............. (5.8) (5.8)
---- ------ ------ ----- ------
Comprehensive income................... 2.7
------
Balance, December 31, 1996............. 2.5 166.4 67.1 3.6 239.6
Capital contribution................... 10.8 10.8
Comprehensive income
Net income........................... 8.3 8.3
Other comprehensive income:
Unrealized losses on investments,
net of unrealized gains,
reclassification adjustments,
and taxes (Note 6).............. 3.3 3.3
---- ------ ------ ----- ------
Comprehensive income................... 11.6
------
Balance, December 31, 1997............. 2.5 177.2 75.4 6.9 262.0
Capital contribution................... 12.5 12.5
Comprehensive income
Net income........................... 14.2 14.2
Other comprehensive income:
Unrealized gains on investments,
net of unrealized losses,
reclassification adjustments,
and taxes (Note 6).............. 1.1 1.1
---- ------ ------ ----- ------
Comprehensive income................... 15.3
------
Balance, December 31, 1998............. $2.5 $189.7 $ 89.6 $ 8.0 $289.8
==== ====== ====== ===== ======
</TABLE>
See accompanying notes to financial statements.
F-20
<PAGE> 86
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
($ IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES (SEE NOTE 2):
Net income.................................................. $ 14.2 $ 8.3 $ 8.5
Adjustments to reconcile net income to net cash (used
in)/provided by operating activities:
Interest credited to policyholders' account balances...... 64.1 71.5 72.5
Universal life and investment-type product policy fee
income................................................. (107.0) (98.1) (85.3)
Capitalization of deferred policy acquisition costs....... (74.9) (73.8) (68.5)
Amortization of deferred policy acquisition costs......... 35.5 46.3 36.6
Provision for depreciation and amortization............... 1.0 0.4 1.4
Provision for deferred federal income taxes............... (1.1) (13.4) (10.6)
Net realized gains on investments......................... (7.1) (2.7) (0.9)
Change in other assets and accounts payable and other
liabilities............................................ 45.3 29.6 28.2
Change in future policy benefits.......................... 5.9 0.2 1.2
Change in other policyholders' liabilities................ 15.7 5.0 2.0
Change in current federal income taxes payable............ (4.6) (11.2) 15.0
------- ------- -------
Net cash (used in) provided by operating activities......... (13.0) (37.9) 0.1
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales, maturities or repayments of:
Fixed maturities.......................................... 171.4 130.6 134.8
Equity securities......................................... 0.8 1.0 0.0
Mortgage loans on real estate............................. 37.6 37.7 53.2
Real estate............................................... 17.0 18.6 19.8
Other invested assets..................................... 0.6 1.5 0.0
Acquisitions of investments:
Fixed maturities.......................................... (109.2) (157.6) (163.8)
Equity securities......................................... (0.1) (0.1) 0.0
Mortgage loans on real estate............................. (24.3) (13.6) (38.7)
Real estate............................................... (0.6) (1.5) (3.4)
Other invested assets..................................... (0.3) (0.1) (0.3)
Policy loans, net......................................... (6.2) (4.4) (3.3)
Other..................................................... (0.5) 0.3 (0.9)
------- ------- -------
Net cash provided by (used in) investing activities......... $ 86.2 $ 12.4 $ (2.6)
------- ------- -------
</TABLE>
See accompanying notes to financial statements.
F-21
<PAGE> 87
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CASH FLOWS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
($ IN MILLIONS)
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipts from annuity and universal life policies credited
to policyholders' account balances........................ $ 811.8 $ 810.4 $ 753.5
Return of policyholders' account balances on annuity
policies and universal life policies...................... (797.6) (829.1) (786.0)
------- ------- -------
Net cash provided by (used in) financing activities......... 14.2 (18.7) (32.5)
------- ------- -------
Net increase (decrease) in cash and cash equivalents........ 87.4 (44.2) (35.0)
Cash and cash equivalents, beginning of year................ 46.0 90.2 125.2
------- ------- -------
Cash and cash equivalents, end of year...................... $ 133.4 $ 46.0 $ 90.2
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes................................................ $ 13.4 $ 29.1 $ 0.0
</TABLE>
See accompanying notes to financial statements.
F-22
<PAGE> 88
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF BUSINESS:
MONY Life Insurance Company of America (the "Company"), an Arizona stock
life insurance company, is a wholly-owned subsidiary of MONY Life Insurance
Company of New York (MONY Life), a stock life insurance company. MONY Life is a
wholly owned subsidiary of The MONY Group, Inc. (the "MONY Group").
The Company's primary business is to provide asset accumulation and life
insurance 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 Life's career agency sales force. These
products are sold throughout the United States (except New York) and Puerto
Rico.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP"). Prior to 1996, the Company,
as a wholly-owned stock insurance subsidiary of a mutual life insurance company
(MONY Life), prepared its financial statements in conformity with accounting
practices prescribed or permitted by the Arizona State Insurance Department
("SAP"), which accounting practices were considered to be GAAP for mutual life
insurance companies and their wholly-owned stock insurance subsidiaries. As of
January 1, 1996, the Company adopted Financial Accounting Standards Board
("FASB") Interpretation No. 40, Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises (the
"Interpretation"), and Statement of Financial Accounting Standards ("SFAS") No.
120, Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long Duration Participating Policies (the
"Standard"). The Interpretation and the Standard require mutual life insurance
companies and their wholly-owned stock insurance subsidiaries to adopt all
applicable authoritative GAAP pronouncements in their general purpose financial
statements. Accordingly, the initial effect of applying the Interpretation and
the Standard has been reported retroactively through the restatement of
previously issued financial statements presented herein for comparative purposes
(see Note 13).
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ 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) deferred policy acquisition costs, (ii) the liability for future
policy benefits, and (iii) valuation allowances for mortgage loans and real
estate to be disposed of, and impairment writedowns for real estate held for
investment.
During 1997, the Company adopted SFAS No. 130, Reporting Comprehensive
Income, which was issued by the FASB in June of 1997. SFAS No. 130 established
standards for reporting and display of comprehensive income and its components
in general purpose financial statements. All periods presented herein reflect
the provisions of SFAS No. 130.
Valuation of Investments and Realized Gains and Losses
All of the Company's fixed maturity securities are classified as
available-for-sale and are reported at estimated fair value. Unrealized gains
and losses on fixed maturity securities are reported as a separate component of
other comprehensive income, net of deferred income taxes and an adjustment for
the effect on deferred policy acquisition costs that would have occurred if such
gains and losses had been realized. The cost of fixed maturity securities is
adjusted for impairments in value deemed to be other than temporary. These
F-23
<PAGE> 89
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
adjustments are reflected as realized losses on investments. Realized gains and
losses on sales of investments are determined on the basis of specific
identification.
Mortgage loans on real estate are stated at their unpaid principal
balances, net of valuation allowances. Valuation allowances are established for
the excess of the carrying value of a mortgage loan over its estimated fair
value when the loan is considered to be impaired. Mortgage loans are considered
to be impaired when, based on current information and events, it is probable
that the Company will be unable to collect all amounts due according to the
contractual terms of the loan agreement. Estimated fair value is based on either
the present value of expected future cash flows discounted at the loan's
original effective interest rate, or the loan's observable market price (if
considered to be a practical expedient), or the fair value of the collateral if
the loan is collateral dependent and if foreclosure of the loan is considered
probable. The provision for loss is reported as a realized loss on investment.
Loans in foreclosure and loans considered to be impaired, other than
restructured loans, are placed on non-accrual status. Interest received on
non-accrual status mortgage loans is included in investment income in the period
received. Interest income on restructured mortgage loans is accrued at the
restructured loans' interest rate.
Real estate held for investment, as well as related improvements, are
generally stated at cost less depreciation. Depreciation is determined using the
straight-line method over the estimated useful life of the asset (which may
range from 5 to 40 years). Cost is adjusted for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be recoverable. In performing the review for recoverability, management
estimates the future cash flows expected from real estate investments, including
the proceeds on disposition. If the sum of the expected undiscounted future cash
flows is less than the carrying amount of the real estate, an impairment loss is
recognized. Impairment losses are based on the estimated fair value of the real
estate, which is generally computed using the present value of expected future
cash flows from the real estate discounted at a rate commensurate with the
underlying risks. Real estate acquired in satisfaction of debt is recorded at
estimated fair value at the date of foreclosure. Real estate that management
intends to sell is classified as "to be disposed of". Real estate to be disposed
of is reported at the lower of its current carrying value or estimated fair
value less estimated sales costs. Changes in reported values relating to real
estate to be disposed of and impairments of real estate held for investment are
reported as realized gains or losses on investments.
Policy loans are carried at their unpaid principal balances.
Cash and cash equivalents include cash on hand, amounts due from banks and
highly liquid debt instruments with an original maturity of three months or
less.
Recognition of Insurance Revenue and Related Benefits
Premiums from universal life and investment-type contracts are reported as
deposits to policyholders' account balances. Revenue from these types of
products consists of amounts assessed during the period against policyholders'
account balances for policy administration charges, cost of insurance and
surrender charges. Policy benefits charged to expense include benefit claims
incurred in the period in excess of the related policyholders' account balance.
Premiums from non-participating term life and annuity policies with life
contingencies are recognized as premium income when due. Benefits and expenses
are matched with such income so as to result in the recognition of profits over
the life of the contracts. This match is accomplished by means of the provision
for liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
Deferred Policy Acquisition Costs ("DAC")
The costs of acquiring new business, principally commissions, underwriting,
agency, and policy issue expenses, all of which vary with and are primarily
related to the production of new business, are deferred.
F-24
<PAGE> 90
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
For universal life products and investment-type products, DAC is amortized
over the expected life of the contracts (ranging from 15 to 30 years) as a
constant percentage based on the present value of estimated gross profits
expected to be realized over the life of the contracts using the initial
locked-in contract rate. The contract rate for all products is 8 percent.
Estimated gross profits arise principally from investment results, mortality and
expense margins and surrender charges.
For non-participating term policies, DAC is amortized over the expected
life of the contracts (ranging from 5 to 20 years) based on the present value of
the estimated gross premiums.
DAC is subject to recoverability testing at the time of policy issuance and
loss recognition testing at the end of each accounting period. The effect on the
amortization of DAC of revisions in estimated experience is reflected in
earnings in the period such estimates are revised. In addition, the effect on
the DAC asset that would result from the realization of unrealized gains
(losses) is recognized through an offset to Other Comprehensive Income as of the
balance sheet date.
Policyholders' Account Balances and Future Policy Benefits
Policyholders' account balances for universal life and investment-type
contracts represent an accumulation of gross premium payments plus credited
interest less expense and mortality charges and withdrawals. The weighted
average interest crediting rate for universal life products was approximately
5.7%, 5.8%, and 5.8% for the years ended December 31, 1998, 1997, and 1996,
respectively. The weighted average interest crediting rate for investment-type
products was approximately 5.6% for each of the years ended December 31, 1998,
1997, and 1996, respectively.
GAAP reserves for non-participating term life policies are calculated using
a net level premium method on the basis of actuarial assumptions equal to
expected investment yields, mortality, terminations, and expenses applicable at
the time the insurance contracts are made, including a provision for the risk of
adverse deviation.
Federal Income Taxes
The Company files a consolidated federal income tax return with its parent,
MONY Life, along with MONY Life's other life and non-life subsidiaries. Deferred
income tax assets and liabilities are recognized based on the difference between
financial statement carrying amounts and income tax bases of assets and
liabilities using enacted income tax rates and laws.
The method of allocation between the companies is subject to written
agreement, approved by the Board of Directors. The allocation of federal income
taxes will be based upon separate return calculations with current credit for
losses and other federal income tax credits provided to the life insurance
members of the affiliated group. Intercompany balances are settled annually in
the fourth quarter of the year in which the return is filed.
Reinsurance
The Company has reinsured certain of its life insurance and annuity
business with life contingencies with MONY Life and other insurance companies
under various agreements. Amounts due from reinsurers are estimated based on
assumptions consistent with those used in establishing the liabilities related
to the underlying reinsured contracts. Policy and contract liabilities are
reported gross of reserve credits. Gains on reinsurance are deferred and
amortized into income over the remaining life of the underlying reinsured
contracts.
The reinsurer's investment in a reinsurance contract consists of amounts
paid to the ceding company at the inception of the contract (e.g. expense
allowances and the excess of liabilities assumed by the reinsurer
F-25
<PAGE> 91
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
over the assets transferred to the reinsurer under the contract) plus the amount
of capital required to support such business consistent with prudent business
practices, regulatory requirements, and the reinsurer's credit rating. The
Company estimates the capital required to support such business based on what it
considers to be an appropriate level of risk-based capital in light of
regulatory requirements and prudent business practices.
Separate Accounts
Separate accounts are established in conformity with insurance laws and are
generally not chargeable with liabilities that arise from any other business of
the Company. Separate account assets are subject to general account claims only
to the extent that the value of such assets exceeds the separate account
liabilities. Investments held in separate accounts and liabilities of the
separate accounts are reported separately as assets and liabilities.
Substantially all separate account assets are reported at estimated fair value.
Investment income and gains or losses on the investments of separate accounts
accrue directly to contractholders and, accordingly, are not reflected in the
Company's statements of income and cash flows. Fees charged to the separate
accounts by the Company (including mortality charges, policy administration fees
and surrender charges) are reflected in the Company's revenues.
Statements of Cash Flows -- Non-cash Transactions
For the years ended December 31, 1998, 1997, and 1996, respectively, real
estate of $0.5 million, $0.0 million, and $0.0 million was acquired in
satisfaction of debt. At December 31, 1998 and 1997, the Company owned real
estate acquired in satisfaction of debt of $8.0 million and $21.7 million,
respectively.
New Accounting Pronouncements
In January 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 97-3, "Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments". SOP 97-3 provides guidance for
determining when an entity should recognize a liability for guaranty fund and
other insurance-related assessments and when it may recognize an asset for a
portion or all of the assessment liability or paid assessment that can be
recovered through premium tax offsets or policy surcharges. SOP 97-3 is
effective for fiscal years beginning after December 15, 1998. Adoption of SOP
97-3 is not expected to have a material effect on the Company's financial
condition or results of operations.
In June 1998, The FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 requires all derivatives to be
recognized in the statement of financial position as either assets or
liabilities and measured at fair value. The corresponding derivative gains and
losses should be reported based on the hedge relationship that exists, if there
is one. Changes in the fair value of derivatives that are not designated as
hedges or that do not meet the hedge accounting criteria in SFAS 133, are
required to be reported in earnings. SFAS 133 is effective for fiscal years
beginning after June 15, 1999. Adoption of SFAS 133 is not expected to have a
material effect on the Company's financial condition or results of operations.
3. RELATED PARTY TRANSACTIONS:
MONY Life has guaranteed to certain states that the statutory surplus of
the Company will be maintained at amounts at least equal to the minimum surplus
for admission to those states.
At December 31, 1998 and 1997, approximately 23% and 26% of the Company's
investments in mortgages were held through joint participation with MONY Life,
respectively. In addition, 100% of the Company's real estate and joint venture
investments were held through joint participation with MONY Life at December 31,
1998 and 1997.
F-26
<PAGE> 92
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company and MONY Life are parties to an agreement whereby MONY Life
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 Life of $0.1 million in each of the years ending
December 31, 1998, 1997 and 1996.
The Company has a service agreement with MONY Life whereby MONY Life
provides personnel services, facilities, supplies and equipment to the Company
to conduct its business. The associated costs related to the service agreement
are allocated to the Company based on methods that management believes are
reasonable, including a review of the nature of such costs and time studies
analyzing the amount of employee compensation costs incurred by the Company. For
the years ended December 31, 1998, 1997, and 1996, the Company incurred expenses
of $63.6 million, $37.1 million and $32.3 million as a result of such
allocations. The allocated costs, however, are only partially reimbursable to
MONY Life by the Company. Accordingly, the Company recorded capital
contributions from MONY Life of $12.5 million, $10.8 million, and $13.4 million
during 1998, 1997 and 1996 respectively. At December 31, 1998 and 1997 the
Company had a payable to MONY Life in connection with this service agreement of
$9.0 million and $10.7 million, respectively, which is reflected in Accounts
Payable and Other Liabilities.
The Company has an investment advisory agreement with MONY Life whereby
MONY Life provides investment advisory services with respect to the investment
and management of the Company's investment portfolio. The amount of expenses
incurred by the Company related to this agreement was $0.9 million; $1.0 million
and $0.7 million for 1998, 1997 and 1996, respectively. In addition, the Company
recorded an intercompany payable of $88,401 and $81,414 at December 31, 1998 and
1997, respectively, related to this agreement which is included in Accounts
payable and other liabilities in the balance sheet.
In addition to the agreements discussed above, the Company has various
other service and investment advisory agreements with MONY Life and affiliates
of the Company. The amount of expenses incurred by the Company related to these
agreements was $2.0 million, $2.6 million and $2.6 million for 1998, 1997 and
1996, respectively. In addition, the Company recorded an intercompany
(receivable)/payable of $(0.2) million and $0.3 million at December 31, 1998 and
1997, respectively, related to these agreements.
4. DEFERRED POLICY ACQUISITION COSTS:
Policy acquisition costs deferred and amortized in 1998, 1997 and 1996 are
as follows ($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of year.................................. $281.6 $262.3 $219.4
Costs deferred during the year.............................. 75.0 73.8 68.5
Amortized to expense during the year........................ (35.5) (46.3) (36.6)
Effect on DAC from unrealized gains (losses) (see Note 2)... (2.5) (8.2) 11.0
------ ------ ------
Balance, end of year........................................ $318.6 $281.6 $262.3
====== ====== ======
</TABLE>
5. FEDERAL INCOME TAXES:
The Company files a consolidated federal income tax return with MONY Life
and MONY Life's other subsidiaries. Federal income taxes have been calculated in
accordance with the provisions of the Internal
F-27
<PAGE> 93
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Revenue Code of 1986, as amended. A summary of the Federal income tax expense
(benefit) is presented below ($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current................................................... $ 8.8 $17.9 $15.2
Deferred.................................................. (1.1) (13.4) (10.6)
----- ----- -----
Total............................................. $ 7.7 $ 4.5 $ 4.6
===== ===== =====
</TABLE>
Federal income taxes reported in the statements of income may be different
from the amounts determined by multiplying the earnings before federal income
taxes by the statutory federal income tax rate of 35%. The sources of the
difference and the tax effects of each are as follows ($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Tax at statutory rate....................................... $ 7.7 $ 4.5 $ 4.6
Dividends received deduction................................ (1.1) (1.2) (0.8)
Other....................................................... 1.1 1.2 0.8
----- ----- -----
Provision for income taxes.................................. $ 7.7 $ 4.5 $ 4.6
===== ===== =====
</TABLE>
The Company's federal income tax returns for years through 1991 have been
examined by the Internal Revenue Service ("IRS"). No material adjustments were
proposed by the IRS as a result of these examinations. In the opinion of
management, adequate provision has been made for any additional taxes which may
become due with respect to open years.
The components of deferred tax liabilities and assets at December 31, 1998
and 1997 are as follows ($ in millions):
<TABLE>
<CAPTION>
1998 1997
------ -----
<S> <C> <C>
Deferred policy acquisition costs........................... $ 91.8 $81.7
Fixed maturities............................................ 12.0 9.6
Other (net)................................................. 4.4 5.1
------ -----
Total deferred tax liabilities.............................. 108.2 96.4
------ -----
Policyholder and separate account liabilities............... 93.7 88.8
Real estate and mortgages................................... 0.8 0.1
------ -----
Total deferred tax assets................................... 94.5 88.9
------ -----
Net deferred tax liability.................................. $ 13.7 $ 7.5
====== =====
</TABLE>
The Company is required to establish a valuation allowance for any portion
of the deferred tax asset that management believes will not be realized. In the
opinion of management, it is more likely than not that it will realize the
benefit of the deferred tax assets and, therefore, no such valuation allowance
has been established.
F-28
<PAGE> 94
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. INVESTMENT INCOME, REALIZED AND UNREALIZED INVESTMENT GAINS (LOSSES), AND
OTHER COMPREHENSIVE INCOME:
Net investment income for the years ended December 31, 1998, 1997 and 1996
was derived from the following sources ($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ------ ------
<S> <C> <C> <C>
NET INVESTMENT INCOME
Fixed maturities............................................ $77.2 $ 78.4 $ 76.7
Mortgage loans.............................................. 11.0 12.1 14.7
Real estate................................................. 0.5 2.0 3.7
Policy loans................................................ 3.6 3.5 2.7
Other investments (including cash & cash equivalents)....... 5.3 6.4 7.3
----- ------ ------
Total investment income..................................... 97.6 102.4 105.1
Investment expenses......................................... 3.0 3.3 3.1
----- ------ ------
Net investment income....................................... $94.6 $ 99.1 $102.0
===== ====== ======
</TABLE>
Net realized gains (losses) on investments for the years ended December 31,
1998, 1997 and 1996 are summarized as follows ($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ------ ------
<S> <C> <C> <C>
NET REALIZED GAINS (LOSSES) ON INVESTMENTS
Fixed maturities............................................ $ 2.6 $ (0.7) $ 0.1
Mortgage loans.............................................. 1.4 2.4 0.7
Real estate................................................. 2.5 0.5 0.8
Other invested assets....................................... 0.6 0.5 (0.7)
----- ------ ------
Net realized gains on investments........................... $ 7.1 $ 2.7 $ 0.9
===== ====== ======
</TABLE>
The net change in unrealized investment gains (losses) represents the only
component of other comprehensive income for the years ended December 31, 1998,
1997, and 1996. Following is a summary of the change in unrealized investment
gains (losses) net of related deferred income taxes and adjustment for deferred
policy acquisition costs (see Note 2), which are reflected in Accumulated Other
Comprehensive Income for the periods presented ($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- ------
<S> <C> <C> <C>
CHANGE IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Fixed maturities............................................ $ 4.8 $13.2 $(20.4)
Other....................................................... (0.6) 0.1 0.5
----- ----- ------
Subtotal.................................................... 4.2 13.3 (19.9)
Effect on unrealized gains (losses) on investments
attributable to:
DAC....................................................... (2.5) (8.2) 11.0
Deferred federal income taxes............................. (0.6) (1.8) 3.1
----- ----- ------
Change in unrealized gains (losses) on investments, net..... $ 1.1 $ 3.3 $ (5.8)
===== ===== ======
</TABLE>
F-29
<PAGE> 95
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the reclassification adjustments required
for the years ended December 31, 1998, 1997, and 1996 to avoid double-counting
in comprehensive income items that are included as part of net income for a
period that also had been part of other comprehensive income in earlier periods
($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- ------
<S> <C> <C> <C>
RECLASSIFICATION ADJUSTMENTS
Unrealized gains (losses) on investments arising during
period.................................................... $ 1.9 $ 3.3 $ (5.8)
Reclassification adjustment for gains included in net
income.................................................... (0.8) 0.0 0.0
----- ----- ------
Unrealized gains (losses) on investments, net of
reclassification adjustments.............................. $ 1.1 $ 3.3 $ (5.8)
===== ===== ======
</TABLE>
Unrealized gains (losses) on investments arising during the period reported
in the above table for the years ended December 31, 1998, 1997 and 1996 are net
of income tax expense (benefit) of $0.1 million, $1.8 million, and ($3.1)
million, respectively, and ($0.5) million, ($8.2) million, and $11.0 million,
respectively, relating to the effect of such unrealized gains (losses) on DAC.
Reclassification adjustments reported in the above table for the years
ended December 31, 1998, 1997 and 1996 are net of income tax expense (benefit)
of $0.5 million, $0.0 million and $0.0 million, respectively, and ($2.0)
million, $0.0 million and $0.0 million, respectively, relating to the effect of
such amounts on DAC.
7. INVESTMENTS:
Fixed Maturity Securities Available-For-Sale:
The amortized cost, gross unrealized gains and losses, and estimated fair
value of fixed maturity securities available for sale as of December 31, 1998
and December 31, 1997 are as follows ($ in millions):
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------------- ------------- ----------- -------------------
1998 1997 1998 1997 1998 1997 1998 1997
-------- -------- ----- ----- ---- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
US Treasury securities and obligations of
U.S government agencies................. $ 5.3 $ 5.9 $ 0.0 $ 0.0 $0.0 $0.0 $ 5.3 $ 5.9
Collateralized mortgage obligations:
Government agency-backed................ 106.3 123.7 1.9 2.2 0.0 0.1 108.2 125.8
Non-agency backed....................... 37.7 40.6 1.8 2.0 0.0 0.1 39.5 42.5
Other asset-backed securities:
Government agency-backed................ 0.1 0.2 0.0 0.0 0.0 0.0 0.1 0.2
Non-agency backed....................... 83.4 87.5 1.9 2.1 0.3 0.1 85.0 89.5
Utilities................................. 120.9 123.8 5.0 3.1 2.7 0.2 123.2 126.7
Corporate bonds........................... 645.8 676.5 23.2 18.0 0.8 1.7 668.2 692.8
Affiliates................................ 14.7 16.0 0.0 0.0 0.0 0.0 14.7 16.0
-------- -------- ----- ----- ---- ---- -------- --------
Total............................ $1,014.2 $1,074.2 $33.8 $27.4 $3.8 $2.2 $1,044.2 $1,099.4
======== ======== ===== ===== ==== ==== ======== ========
</TABLE>
The carrying value of the Company's fixed maturity securities at December
31, 1998 and 1997 is net of adjustments for impairments in value deemed to be
other than temporary of $0.5 million and $0.9 million, respectively.
At December 31, 1998 and 1997, there were no fixed maturity securities
which were non-income producing for the twelve months preceding such dates.
The Company classifies fixed maturity securities which, (i) are in default
as to principal or interest payments, (ii) are to be restructured pursuant to
commenced negotiations, (iii) went into bankruptcy subsequent to acquisition or
(iv) are deemed to have other than temporary impairments to value, as "problem
F-30
<PAGE> 96
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
fixed maturity securities." At December 31, 1998 and 1997, the carrying value of
problem fixed maturities held by the Company was $4.4 million and $4.6 million,
respectively. In addition, at December 31, 1998, the Company held $2.7 million
of fixed maturity securities which had been restructured. There were no fixed
maturity securities which were restructured at December 31, 1997. Gross interest
income that would have been recorded in accordance with the original terms of
restructured fixed maturity securities amounted to $0.3 million for the year
ended December 31, 1998. Gross interest income on these fixed maturity
securities included in net investment income aggregated $0.5 million for the
year ended December 31, 1998.
The amortized cost and estimated fair value of fixed maturity securities,
by contractual maturity dates, (excluding scheduled sinking funds) as of
December 31, 1998 are as follows ($ in millions):
<TABLE>
<CAPTION>
1998
-----------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
<S> <C> <C>
Due in one year or less..................................... $ 90.0 $ 90.4
Due after one year through five years....................... 306.8 315.5
Due after five years through ten years...................... 284.7 299.2
Due after ten years......................................... 105.2 106.3
-------- --------
Subtotal.......................................... 786.7 811.4
Mortgage- and asset-backed securities....................... 227.5 232.8
-------- --------
Total............................................. $1,014.2 $1,044.2
======== ========
</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 fixed maturity securities during 1998, 1997 and 1996
were $45.1 million, $31.3 million and $13.3 million, respectively. Gross gains
of $0.7 million, $0.5 million, and $0.2 million and gross losses of $0.1
million, $1.1 million, and $0.3 million were realized on these sales,
respectively.
8. MORTGAGE LOANS ON REAL ESTATE AND REAL ESTATE:
Mortgage loans on real estate at December 31, 1998 and 1997 consist of the
following ($ in millions):
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Commercial mortgage loans................................... $ 28.5 $ 35.5
Agricultural and other loans................................ 93.5 99.5
------ ------
Total loans................................................. 122.0 135.0
Less: valuation allowances.................................. (1.9) (2.5)
------ ------
Mortgage loans, net of valuation allowances................. $120.1 $132.5
====== ======
</TABLE>
An analysis of the valuation allowances for 1998, 1997 and 1996 is as
follows ($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Balance, beginning of year.................................. $ 2.5 $ 4.6 $ 5.1
Increase (decrease) in allowance............................ (0.4) (0.3) (0.5)
Reduction due to pay downs and pay offs..................... 0.0 (1.8) 0.0
Transfers to real estate.................................... (0.2) 0.0 0.0
----- ----- -----
Balance, end of year........................................ $ 1.9 $ 2.5 $ 4.6
===== ===== =====
</TABLE>
F-31
<PAGE> 97
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Impaired mortgage loans along with related valuation allowances were as
follows ($ in millions):
<TABLE>
<CAPTION>
1998 1997
----- -----
<S> <C> <C>
Investment in impaired mortgage loans (before valuation
allowances):
Loans that have valuation allowances........................ $ 9.4 $ 9.9
Loans that do not have valuation allowances................. 5.8 6.5
----- -----
Subtotal.......................................... 15.2 16.4
Valuation allowances........................................ (0.5) (0.9)
----- -----
Impaired mortgage loans, net of valuation
allowances....................................... $14.7 $15.5
===== =====
</TABLE>
Impaired mortgage loans that do not have valuation allowances are loans
where the net present value of the expected future cash flows related to the
loan or the fair value of the collateral equals or exceeds the recorded
investment in the loan. Such loans primarily consist of restructured loans or
loans on which impairment writedowns were taken prior to the adoption of SFAS
No. 114, "Accounting by Creditors for Impairment of a Loan".
During 1998 and 1997, the average recorded investment in impaired mortgage
loans was approximately $15.1 million and $16.3 million, respectively. During
1998, 1997, and 1996, the Company recognized $1.1 million, $1.1 million, and
$1.4 million, respectively, of interest income on impaired loans.
At December 31, 1998 and 1997, there were no mortgage loans which were
non-income producing for the twelve months preceding such dates.
At December 31, 1998 and 1997, the Company had restructured mortgage loans
of $14.3 million and $13.5 million, respectively. Interest income of $1.0
million, $1.0 million, and $1.2 million was recognized on restructured mortgage
loans in 1998, 1997, and 1996, respectively. Gross interest income on these
loans that would have been recorded in accordance with the original terms of
such loans amounted to approximately $1.4 million in 1998, 1997 and 1996.
The following table summarizes the Company's real estate at December 31,
1998 and 1997 ($ in millions):
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------
1998 1997
------ ------
<S> <C> <C>
Real estate to be disposed of(1)............................ $ -- $30.3
Impairment writedowns....................................... -- (8.9)
Valuation allowance......................................... -- (2.2)
----- -----
Carrying value of real estate to be disposed of............. $ -- $19.2
===== =====
Real estate held for investment(2).......................... $10.2 $ 3.3
Impairment writedowns....................................... (1.9) (0.5)
----- -----
Carrying value of real estate held for investment........... $ 8.3 $ 2.8
===== =====
</TABLE>
- ---------------
(1) Amounts presented as of December 31, 1998 and 1997 are net of $0.0 million
and $8.9 million, respectively, relating to impairments taken upon
foreclosure of mortgage loans.
(2) Amounts presented as of December 31, 1998 and 1997 are net of $1.6 million
and $0.6 million, respectively, relating to impairments taken upon
foreclosure of mortgage loans.
F-32
<PAGE> 98
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
An analysis of the valuation allowances relating to real estate classified
as to be disposed of for the years ended December 31, 1998, 1997 and 1996 is as
follows ($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Balance, beginning of year.................................. $ 2.2 $ 2.2 $ 2.5
Increase (decrease) due to/from transfers of properties to
real estate to be disposed of during the year............. (0.3) 1.2 0.6
Increases (decreases) in valuation allowances from the end
of the prior period on properties still held for
disposal.................................................. 0.0 (0.2) (0.2)
Decreases as a result of sales.............................. (1.9) (1.0) (0.7)
----- ----- -----
Balance, end of year........................................ $ 0.0 $ 2.2 $ 2.2
===== ===== =====
</TABLE>
Real estate is net of accumulated depreciation of $1.9 million and $2.8
million for 1998 and 1997, respectively, and depreciation expense recorded was
$0.6 million, $0.4 million and $0.8 million for the years ended December 31,
1998, 1997 and 1996, respectively.
At December 31, 1998 and 1997, there was no real estate which was
non-income producing for the twelve months preceding such dates.
The carrying value of impaired real estate as of December 31, 1998 and 1997
was $8.3 million and $2.8 million, respectively. The depreciated cost of such
real estate as of December 31, 1998 and 1997 was $10.2 million and $3.3 million
before impairment writedowns of $1.9 million and $0.5 million, respectively. The
aforementioned impairments occurred primarily as a result of low occupancy
levels and other market related factors. There were no losses recorded during
1998, 1997, and 1996 related to impaired real estate.
9. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair values of the Company's financial instruments
approximate their carrying amounts. The methods and assumptions utilized in
estimating the fair values of the Company's financial instruments are summarized
as follows:
Fixed Maturities
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 values of mortgage loans are 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 mortgages 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.
F-33
<PAGE> 99
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Separate Account Assets and Liabilities
The estimated fair value of assets held in Separate Accounts is based on
quoted market prices. The fair value of liabilities related to Separate Accounts
is the amount payable on demand, which includes surrender charges.
Investment-Type Contracts
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.
10. REINSURANCE:
Life insurance business is ceded on a yearly renewable term basis under
various reinsurance contracts. The Company's general practice is to retain no
more than $0.5 million of risk on any one person for individual products and
$0.5 million for last survivor products.
The following table summarizes the effect of reinsurance for the years
indicated ($ in millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Direct premiums............................................. $ 2.5 $ 0.1 $ 0.0
Reinsurance ceded........................................... (0.8) 0.0 0.0
----- ----- -----
Net premiums........................................... $ 1.7 $ 0.1 $ 0.0
===== ===== =====
Universal life and investment type product policy fee income
ceded..................................................... $17.4 $16.1 $14.6
===== ===== =====
Policyholders' benefits ceded............................... $21.8 $12.1 $17.6
===== ===== =====
</TABLE>
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.
11. OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK:
Financial Instruments with Off-Balance Sheet Risk:
Pursuant to a securities lending agreement with a major financial
institution, the Company from time to time lends securities to approved
borrowers. At December 31, 1998 and 1997, securities loaned by the Company under
this agreement had a carrying value of approximately $4.1 million and $0.1
million, respectively. The minimum collateral on securities loaned is 102
percent of the market value of the loaned securities. Such securities are marked
to market on a daily basis and the collateral is correspondingly increased or
decreased.
Concentration of Credit Risk:
At December 31, 1998 and 1997, the Company had no single investment or
series of investments with a single issuer, (excluding US Treasury securities
and obligations of U.S. government agencies) exceeding 1.5% of total cash and
invested assets.
The Company's fixed maturity securities are diversified by industry type.
The industries that comprise 10% or more of the carrying value of the fixed
maturity securities at December 31, 1998 are Consumer Goods and Services of
$138.5 million (13.3%), Non-Government Asset/Mortgage-Backed of $124.5 million
F-34
<PAGE> 100
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(11.9%), Public Utilities of $123.2 million (11.8%), Financial Services of
$119.8 million (11.5%), Other Manufacturing of $116.4 million (11.1%),
Government and Agencies of $113.6 million (10.9%), and Energy of $112.1 million
(10.7%).
At December 31, 1997 the industries that comprise 10% or more of the
carrying value Company's fixed maturity securities were Financial Services of
$136.1 million (12.4%), Non-Government Asset/Mortgage Backed of $132.0 million
(12.0%), Government and Agencies of $131.9 million (12.0%), Energy of $131.2
million (11.9%), Public Utilities of $126.7 million (11.5%), and Consumer Goods
and Services of $121.4 million (11.1%).
The Company holds below investment grade fixed maturity securities with a
carrying value of $52.3 million at December 31, 1998. These investments consist
mostly of privately issued bonds which are monitored by the Company through
extensive internal analysis of the financial condition of the issuers and which
generally include protective debt covenants. At December 31, 1997, the carrying
value of the Company's investments in below investment grade fixed maturity
securities amounted to $79.2 million.
The Company has investments in commercial and agricultural mortgage loans
and real estate (including partnerships). The locations of property
collateralizing mortgage loans and real estate investment carrying values at
December 31, 1998 and 1997 are as follows ($ in millions):
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C> <C> <C>
GEOGRAPHIC REGION
West.................................................... $ 54.9 42.7% $ 53.4 34.5%
Mountain................................................ 25.9 20.2 34.1 22.1
Southwest............................................... 14.6 11.4 16.2 10.5
Northeast............................................... 13.9 10.8 24.0 15.5
Midwest................................................. 13.2 10.3 14.5 9.4
Southeast............................................... 5.9 4.6 12.3 8.0
------ ----- ------ -----
Total.............................................. $128.4 100.0% $154.5 100.0%
====== ===== ====== =====
</TABLE>
The states with the largest concentrations of mortgage loans and real
estate investments at December 31, 1998 are: California, $31.3 million (24.4%);
Washington, $17.0 million (13.2%); New York, $13.9 million (10.8%); Texas, $9.7
million (7.6%); Idaho, $8.1 million (6.3%); Missouri, $7.4 million (5.8%); and
Oregon, $6.6 million (5.1%).
As of December 31, 1998 and 1997, the real estate and mortgage loan
portfolio was also diversified as follows ($ in millions):
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C> <C> <C>
PROPERTY TYPE
Agricultural.............................................. $ 92.5 72.0% $ 98.5 63.7%
Office buildings.......................................... 14.9 11.6 23.1 15.0
Retail.................................................... 6.0 4.7 9.5 6.1
Hotel..................................................... 5.1 4.0 8.6 5.6
Industrial................................................ 4.6 3.6 7.2 4.7
Other..................................................... 3.9 3.0 4.3 2.8
Apartment Buildings....................................... 1.4 1.1 3.3 2.1
------ ----- ------ -----
Total................................................ $128.4 100.0% $154.5 100.0%
====== ===== ====== =====
</TABLE>
F-35
<PAGE> 101
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
12. COMMITMENTS AND CONTINGENCIES:
(a) In late 1995 and thereafter, a number of purported class actions were
commenced in various state and federal courts against MONY Life and the Company
("the Companies") alleging that the Companies engaged in deceptive sales
practices in connection with the sale of whole and/or universal life insurance
policies in the 1980s and 1990s. 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/or violation of state insurance and/or deceptive business
practice laws). Plaintiffs in these cases (including the Goshen case discussed
below) seek primarily equitable relief (e.g., reformation, specific performance,
mandatory injunctive relief prohibiting the Company from canceling policies for
failure to make required premium payments, imposition of a constructive trust
and/or creation of a claims resolution facility to adjudicate any individual
issues remaining after resolution of all class-wide issues) as opposed to
compensatory damages, although they also seek compensatory damages in
unspecified amounts. The Company has answered the complaints in each action
(except for one recently filed action and another being voluntarily held in
abeyance), has denied any wrongdoing and has 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 Company filed a motion to dismiss or, alternatively, for summary
judgment on all counts of the complaint. All of the other putative class actions
(with one exception discussed below) have been 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. The Massachusetts District
Court in the Multidistrict Litigation has entered an order essentially holding
all of the federal cases 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' on the merits.
In addition to the foregoing, from time to time the Company is a party to
litigation and arbitration proceedings in the ordinary course of its business,
none of which is expected to have a material adverse effect on the Company.
Insurance companies are subject to assessments, up to statutory limits, by
state guaranty funds for losses of policyholders of insolvent insurance
companies. In the opinion of management, such assessments will not have a
material adverse effect on the financial position and the results of operations
of the Company.
At December 31, 1998, the Company had commitments to issue $9.7 million of
fixed rate agricultural loans with periodic interest rate reset dates. The
initial interest rates on such loans range from approximately 6.75% to 7.50%.
The Company had no private fixed maturity securities commitments outstanding as
of December 31, 1998. In addition, at that date the Company had no outstanding
commitments to issue any fixed rate commercial mortgage loans.
(b) The order, referred to above, by the New York State Supreme Court on
October 21, 1997 was affirmed by the New York State Appellate Division, First
Department on March 18, 1999. All actions before the United States District
Court for the District of Massachusetts are still pending. In addition, on or
about February 25, 1999, a purported class action was filed against the Company
in Kentucky State Court covering policyholders who purchased individual
universal life insurance policies from the Company after January 1, 1988
claiming breach of contract and violations of the Kentucky Consumer Protection
Act. On March 26, 1999, the Company removed that action to the United States
District Court for the Eastern District of Kentucky, requested the Judicial
Panel on the multidistrict litigation to transfer the action to the
multidistrict
F-36
<PAGE> 102
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
litigation in the District of Massachusetts and sought a stay of further
proceedings in the Kentucky District Court pending a determination on the
multidistrict transfer. The Company intends vigorously to defend that
litigation. Due to the early stage of this litigation no determination can be
made as to whether the Company will incur any loss with respect to this matter.
13. STATUTORY FINANCIAL INFORMATION AND REGULATORY RISK-BASED CAPITAL
DISCLOSURE:
Financial statements of the Company prepared in accordance with SAP for
filing with the Arizona State Insurance Department (the "Department") differ
from financial statements of the Company prepared in accordance with GAAP. The
principal differences result from the following: (i) acquisition costs are
charged to operations as incurred under SAP rather than being amortized over the
expected life of the contracts under GAAP; (ii) certain assets designated as
"non-admitted assets" are charged directly to statutory surplus under SAP but
are reflected as assets under GAAP; (iii) federal income taxes are provided only
on taxable income for which income taxes are currently payable under SAP,
whereas under GAAP deferred income taxes are recognized; (iv) an interest
maintenance reserve ("IMR") and asset valuation reserve ("AVR") are computed
based on specific statutory requirements and recorded under SAP, whereas under
GAAP, such reserves are not recognized; (v) premiums for universal life and
investment-type products are recognized as revenue when due under SAP, whereas
under GAAP, such amounts are recorded as deposits and not included in the
Company's revenues; (vi) future policy benefit reserves are based on specific
statutory requirements regarding mortality and interest, without consideration
of withdrawals, and are reported net of reinsurance under SAP, whereas, under
GAAP, such reserves are calculated using a net level premium method based on
actuarial assumptions equal to guaranteed mortality rates and are reported gross
of reinsurance; (vii) investments in bonds are generally carried at amortized
cost under SAP, whereas under GAAP, such investments are classified as
"available for sale" and reported at estimated fair value; and (viii) methods
used for calculating real estate and mortgage loan impairments, valuation
allowances, and real estate depreciation under GAAP are different from those
permitted under SAP.
The Company is restricted as to the amounts it may pay as dividends to MONY
Life. Under the Arizona Insurance Law, the Arizona Superintendent has broad
discretion to determine whether the financial condition of a stock life
insurance company would support the payment of dividends to its shareholders.
Under the insurance laws of the State of Arizona, the Company's state of
domicile, dividends or distributions in a twelve-month period exceeding the
lesser of either 10 percent of an insurance company's surplus or 100% of net
income, excluding realized gains, for the previous calendar year are generally
considered extraordinary and require such approval. Insurance Department has
established informal guidelines for the Superintendent's determinations which
focus upon, among other things, the overall financial condition and
profitability of the insurer under SAP.
Set forth below are reconciliations of the Company's combined capital and
surplus and the net change in capital and surplus, determined in accordance with
SAP, with its equity and net income reported in accordance with GAAP as of and
for each year ended December 31, 1998, 1997, and 1996, respectively. The
reconciliations for 1996 also present the effect of restating previously
reported amounts as of and for the year ended December 31, 1996 for the adoption
of the Interpretation and the Standard (see Note 2).
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C>
Capital and surplus......................................... $ 146.8 $ 133.2 $ 121.8
AVR......................................................... 15.0 16.3 17.9
-------- -------- --------
Capital and surplus, and AVR................................ 161.8 149.5 139.7
</TABLE>
F-37
<PAGE> 103
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
($ IN MILLIONS)
<S> <C> <C> <C>
Adjustments:
Future policy benefits and policyholders' account
balances............................................... (226.3) (207.3) (173.2)
Deferred policy acquisition costs......................... 318.6 281.6 262.3
Valuation of investments:
Real estate............................................ 2.7 2.4 (0.5)
Mortgage loans......................................... (1.8) (2.3) (4.7)
Fixed maturity securities.............................. 29.5 24.7 12.0
Other.................................................. 5.4 4.0 3.6
Deferred federal income taxes............................. (13.7) (7.5) (13.3)
Other, net................................................ 13.6 16.9 13.7
-------- -------- --------
GAAP equity................................................. $ 289.8 $ 262.0 $ 239.6
======== ======== ========
Net change in capital and surplus........................... $ 13.6 $ 11.4 $ 6.2
Change in AVR............................................... (1.3) (1.6) 3.9
-------- -------- --------
Net change in capital and surplus, and AVR.................. 12.3 9.8 10.1
Adjustments:
Future policy benefits and policyholders' account
balances............................................... (19.0) (34.1) (25.7)
Deferred policy acquisition costs......................... 39.4 27.5 31.9
Valuation of investments
Real estate............................................ 0.3 2.9 1.5
Mortgage loans......................................... 0.5 2.4 0.4
Fixed maturity securities.............................. 0.0 (0.5) (1.8)
Other.................................................. 1.4 0.4 0.5
Deferred federal income taxes............................. 1.1 13.4 10.6
Other, net................................................ (21.8) (13.5) (19.0)
-------- -------- --------
Net income.................................................. $ 14.2 $ 8.3 $ 8.5
======== ======== ========
</TABLE>
The difference between statutory basis "net income" and the "net change in
capital and surplus, and AVR" reflected in the reconciliation above primarily
relates to the AVR, unrealized gains (losses) on equity securities, non-admitted
assets, and certain contingency provisions. which for statutory reporting
purposes are charged directly to surplus and are not reflected in statutory
basis net income. Statutory net income reported by the Company for the years
ended December 31, 1998, 1997, and 1996 was $11.1 million, $9.7 million, and
$8.0 million, respectively.
In March 1998, the National Association of Insurance Commissioners ("NAIC")
voted to adopt its Codification of Statutory Accounting Principles project
(referred to hereafter as "codification"). Codification is a modified form of
statutory accounting principles that will result in changes to the current NAIC
Accounting Practices and Procedures Manual applicable to insurance enterprises.
Although adoption of codification by all states is not a certainty, the NAIC has
recommended that all states enact codification as soon as practicable with an
effective date of January 1, 2001. It is currently anticipated that codification
will become a NAIC state accreditation requirement starting in 2002. In
addition, the American Institute of Certified Public Accountants and the NAIC
have agreed to continue to allow the use of certain permitted
F-38
<PAGE> 104
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
accounting practices when codification becomes effective in 2001. Any accounting
differences from codification principles, however, must be disclosed and
quantified in the footnotes to the audited financial statements. Therefore,
codification will likely result in changes to what are currently considered
prescribed statutory insurance accounting practices.
Each insurance company's state of domicile imposes minimum risk-based
capital requirements. The formulas for determining the amount of risk-based
capital specify various weighting factors that are applied to financial balances
or various levels of activity based on the perceived degree of risk. Regulatory
compliance is determined by a ratio of the Company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level risk-based
capital, as defined by the NAIC. Companies below specific trigger points or
ratios are classified within certain levels, each of which requires specified
corrective action. The Company exceeded the minimum risk based capital
requirements.
As part of their routine regulatory oversight, the Department recently
completed an examination of the Company for each of the three years in the
period ended December 31, 1996. The report did not cite any matters which will
result in a material effect on the Company's financial condition or results of
operations.
F-39
