<PAGE> 1
KEYNOTE SERIES ACCOUNT
---------------------------------
MUTUAL OF NEW YORK
---------------------------------
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE> 2
THIS REPORT IS NOT TO BE CONSTRUED AS AN OFFERING FOR SALE OF ANY CONTRACTS
PARTICIPATING IN THE KEYNOTE SERIES ACCOUNT, OR AS A SOLICITATION AS AN OFFER TO
BUY ANY CONTRACTS UNLESS PRECEDED BY OR ACCOMPANIED BY A CURRENT PROSPECTUS
WHICH CONTAINS THE COMPLETE INFORMATION OF CHARGES AND EXPENSES.
<PAGE> 3
MONY SERIES FUND, INC.
Dear Shareholder,
With the success of the Federal Reserve's preemptive tightening of monetary
policy in order to head off any inflationary pressures, the U.S. economy has
settled into a slower growth path. Consumer spending is weak in the U.S., and
most foreign economies are also experiencing slow growth. High levels of
installment debts, concern about layoffs and stagnant income growth should
continue to limit consumer spending. Inflation is low and should remain subdued
with little indication of upward pressure in any of the measures. There are few
signs of anything that would cause growth to accelerate. The soft landing for
the economy has worked. The next move by the Fed should be toward lower rates.
The stock market in 1995 benefited from better than expected corporate
earnings, the success of the soft landing, declining interest rates and large
inflows to equity mutual funds. Slower growth, low inflation and the beginning
of efforts to reduce the federal deficit should continue to keep interest rates
in a stable to lower trend. These same factors that help inflation and interest
rates, however, have a negative impact on corporate earnings. The market has
likely lost much of the earnings support that it has had over the past year.
Some companies should still be able to prosper in this less favorable
environment, but they will be fewer in number and the market will be more
selective.
At the beginning of 1996, the stock market will still be enmeshed in the
same tug of war between the conflicting forces of positive overall conditions
and uncertain individual industry and company fundamentals. How this resolves
itself will be a major determinant of the market's performance in 1996,
especially since valuations are still on the high side. As markets generally
anticipate the future, it is possible that 1995's very strong year in both the
stock and bond markets has already discounted some of the positive investment
environment expected in 1996. My observation is that the market could thus
correct, even as good news is being reported. The stock market still has not
experienced a significant correction, although individual industries and a
number of stocks have had twenty percent or more declines.
The market had the benefit of strong inflows of money in 1995. Individuals
seeking to increase their retirement savings, to start a new pension program, or
simply to earn a higher rate of return made substantial investments in equity
funds. If the conviction that stocks offer the best long-term returns is
temporarily shaken, and these flows reverse, it would be very negative for the
market. Most of the new money is retirement oriented rather than speculative,
and usually part of a periodic deposit plan; and thus, should be more stable and
less likely to switch on temporary bad news. A substantial shift in investment
preference is not expected, but it is a risk which must be considered in the
outlook.
There are a number of events (lack of progress on the deficit, Bosnia,
growth that is too strong or too weak, the election) that could cause a
correction or a temporary disenchantment with stocks. While any of the above
could trigger a market decline, there is no current evidence of anything that
would cause a long-term shift away from stocks. For 1996, it appears that
corporate profits, while growing more slowly, will not totally collapse or turn
negative. The economy is still growing, 1996 is an election year, and no one
wants a recession. Earnings probably may not be as good as in 1995 and neither
may stock market performance, but there should be enough growth for a modestly
positive year in 1996. The bond market was another beneficiary of the positive
macro-economic trends and also enjoyed a strong year. It will be difficult to
match 1995, but if these trends continue, the results should be stable rates and
a positive total return for bonds.
Sincerely,
/s/ Kenneth M. Levine
Kenneth M. Levine
Chairman
1
<PAGE> 4
KEYNOTE SERIES ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
IVA SUBACCOUNT
-------------------------------------------
NON-TAX VARIABLE
TAX-QUALIFIED QUALIFIED PAYOUTS
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Investments at cost (Note 4)........................... $ 9,636,332 $2,294,713 $ 26,208
========== ========= ========
Investments in MONY Series Fund, Inc. at net asset
value (Note 2)....................................... $ 12,821,741 $3,034,778 $ 26,237
Amount due from MONY Series Fund, Inc. ................ 0 0 35,387
------------- ---------- ----------
Total assets................................. 12,821,741 3,034,778 61,624
------------- ---------- ----------
LIABILITIES
Amount due to MONY..................................... 0 0 35,387
------------- ---------- ----------
Net assets............................................. $ 12,821,741 $3,034,778 $ 26,237
========== ========= ========
Net assets consist of:
Contractholders' net payments..................... $ 4,445,736 $1,318,600 $ 11,735
Undistributed net investment income............... 3,383,311 697,118 9,225
Accumulated net realized gains on investments..... 1,807,285 278,995 5,248
Unrealized appreciation of investments............ 3,185,409 740,065 29
------------- ---------- ----------
Net assets............................................. $ 12,821,741 $3,034,778 $ 26,237
========== ========= ========
Number of units outstanding*........................... 163,054 41,289 352
------------- ---------- ----------
Net asset value per unit outstanding................... $78.63 $73.50 $74.55
====== ====== ======
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
2
<PAGE> 5
KEYNOTE SERIES ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
IVA SUBACCOUNT
-------------------------------------------
NON-TAX VARIABLE
TAX- QUALIFIED QUALIFIED PAYOUTS
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------- ---------- ----------
<S> <C> <C> <C>
Dividend income......................................... $ 659,735 $156,153 $ 3,171
Mortality and expense risk charges (Note 3)............. 124,460 27,235 0
-------- -------- ------
Net investment income................................... 535,275 128,918 3,171
-------- -------- ------
Realized and unrealized gains on investments (Note 2):
Proceeds from sales................................ 2,727,090 363,289 63,801
Cost of shares sold................................ 2,062,768 276,477 58,727
-------- -------- ------
Net realized gains on investments....................... 664,322 86,812 5,074
Net increase in unrealized appreciation of
investments........................................... 2,252,186 539,944 313
-------- -------- ------
Net realized and unrealized gains on investments........ 2,916,508 626,756 5,387
-------- -------- ------
Net increase in net assets resulting from operations.... $ 3,451,783 $755,674 $ 8,558
======== ======== ======
</TABLE>
See notes to financial statements.
3
<PAGE> 6
KEYNOTE SERIES ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
IVA SUBACCOUNT
----------------------------------------------------------------------------
NON-TAX VARIABLE
TAX-QUALIFIED QUALIFIED PAYOUTS
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------------- ------------------------ ------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income......................... $ 535,275 $ 608,841 $ 128,918 $ 128,302 $ 3,171 $ 327
Net realized gains (loss) on investments...... 664,322 386,841 86,812 54,891 5,074 (775)
Net increase (decrease) in unrealized
appreciation
of investments.............................. 2,252,186 (1,004,234) 539,944 (188,815) 313 886
----------- ----------- ---------- ---------- ------- -------
Net increase (decrease) in net assets resulting
from operations................................. 3,451,783 (8,552) 755,674 (5,622) 8,558 438
----------- ----------- ---------- ---------- ------- -------
From unit transactions:
Net proceeds from the issuance of units....... 104,567 201,595 18,387 39,604 62,234 95,454
Net asset value of units redeemed or used to
meet contract obligations................... 2,595,434 2,031,888 224,105 287,500 63,801 94,613
----------- ----------- ---------- ---------- ------- -------
Net increase (decrease) from unit transactions.... (2,490,867) (1,830,293) (205,718) (247,896) (1,567) 841
----------- ----------- ---------- ---------- ------- -------
Net increase (decrease) in net assets............. 960,916 (1,838,845) 549,956 (253,518) 6,991 1,279
Net assets beginning of year...................... 11,860,825 13,699,670 2,484,822 2,738,340 19,246 17,967
----------- ----------- ---------- ---------- ------- -------
Net assets end of year*........................... $12,821,741 $11,860,825 $3,034,778 $2,484,822 $26,237 $19,246
=========== =========== ========== ========== ======= =======
Units outstanding beginning of year............... 198,896 229,218 44,577 49,015 344 323
Units issued during the year...................... 1,545 3,286 294 702 952 1,712
Units redeemed during the year.................... 37,387 33,608 3,582 5,140 944 1,691
----------- ----------- ---------- ---------- ------- -------
Units outstanding end of year..................... 163,054 198,896 41,289 44,577 352 344
=========== =========== ========== ========== ======= =======
- ---------------
*Includes undistributed net investment income of: $ 3,383,311 $ 2,848,036 $ 697,118 $ 568,200 $ 9,225 $ 6,054
</TABLE>
See notes to financial statements.
4
<PAGE> 7
KEYNOTE SERIES ACCOUNT
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
Keynote Series Account ("Keynote") is a separate investment account
established on December 16, 1987 by The Mutual Life Insurance Company of New
York ("MONY"), under the laws of the State of New York.
Keynote operates as a unit investment trust under the Investment Company
Act of 1940 (the "1940 Act"). Keynote holds assets that are segregated from all
of MONY's other assets and, at present, is used as a funding vehicle for
retirement plans maintained by state educational organizations and certain other
organizations to purchase tax-deferred annuities for their employees ("Group
Plans") and as a funding vehicle for annuities purchased by individuals,
principally for retirement purposes ("Individual Plans"). MONY is the legal
holder of the assets in Keynote. This report contains information related to
Individual Plans only.
On June 24, 1994, pursuant to an exemptive order granted by the Securities
and Exchange Commission dated June 8, 1994, the Group Plans effected a
substitution of all of its shares in the MONY Series Fund, Inc. for interests in
Diversified Investors Portfolios. The substitution was effected through a
redemption of assets-in-kind and was deemed a non-taxable event for Keynote and
the Fund. The substitution did not involve the assets of the individual plans.
There are three subaccounts which are available to Individual Plans, all of
which invest only in the Equity Income Portfolio (the "Portfolio") of the MONY
Series Fund, Inc. (the "Fund"). The Fund is registered under the 1940 Act as an
open end, diversified, management investment company.
The financial statements of the Portfolio, including the portfolio of
investments, are contained on pages 8 through 23 of this report and should be
read in conjunction with these financial statements.
The operations of Keynote form a part of, and are taxed with, the
operations of MONY. MONY does not expect, based upon current tax law, to incur
any income tax burden upon the earnings or realized capital gains attributed to
Keynote. Based upon this expectation, no charges are currently being deducted
from Keynote for federal income tax purposes.
2. SIGNIFICANT ACCOUNTING POLICIES
Investments:
The investment in shares of the Fund is stated at the net asset value of
the Equity Income Portfolio. The Fund's net asset value is based upon market
valuations of the securities held.
3. RELATED PARTY TRANSACTIONS
Because Keynote purchases shares of the Fund, the net assets of Keynote
reflect the investment management fee charged by MONY Life Insurance Company of
America (a wholly-owned subsidiary of MONY), the investment adviser, which
provides investment advice and related services for each of the Fund's
portfolios.
Daily charges against Keynote for mortality and expense risks assumed by
MONY are computed at an annual rate of 1.0% for the IVA Tax Qualified and
Non-Tax Qualified subaccounts and no charges are made against the IVA Variable
Payouts subaccount.
5
<PAGE> 8
KEYNOTE SERIES ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENTS
Investments in the Equity Income Portfolio of MONY Series Fund, Inc. at
cost, at December 31, 1995 consist of the following:
<TABLE>
<CAPTION>
IVA SUBACCOUNT
--------------------------------------------
NON-TAX VARIABLE
TAX-QUALIFIED QUALIFIED PAYOUTS
SUBACCOUNT SUBACCOUNT SUBACCOUNTS
------------- ---------- -----------
<S> <C> <C> <C>
Shares beginning of year:
Shares................................... 763,736 160,001 1,240
Amount................................... $ 10,927,602 $2,284,701 $19,530
----------- ---------- -------
Share acquired:
Shares................................... 6,368 6,885 3,433
Amount................................... $ 111,763 $ 130,336 $62,234
Shares received for reinvestment of dividends:
Shares................................... 33,643 7,963 162
Amount................................... $ 659,735 $ 156,153 $ 3,171
Shares redeemed:
Shares................................... 149,910 20,093 3,497
Amount................................... $ 2,062,768 $ 276,477 $58,727
----------- ---------- -------
Net change:
Shares................................... (109,899) (5,245) 98
Amount................................... $ (1,291,270) $ 10,012 $ 6,678
----------- ---------- -------
Shares end of year:
Shares................................... 653,837 154,756 1,338
Amount................................... $ 9,636,332 $2,294,713 $26,208
=========== ========== =======
</TABLE>
6
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of the
Mutual Life Insurance Company of New York and the
Contractholders of Keynote Series Account:
We have audited the accompanying statements of assets and liabilities of
IVA Tax Qualified, IVA Non-Tax Qualified and IVA Variable Payouts Subaccounts
(three of the subaccounts constituting the Keynote Series Account) as of
December 31, 1995, the related statements of operations for the year then ended,
and the statements of changes in net assets for each of the two years in the
period then ended. These financial statements are the responsibility of MONY's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the IVA Tax Qualified, IVA
Non-Tax Qualified and IVA Variable Payouts Subaccounts of the Keynote Series
Account as of December 31, 1995, the results of their operations for the year
then ended, and the changes in their net assets for each of the two years in the
period then ended, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 19, 1996
7
<PAGE> 10
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
In an uncertain environment with valuations high and the earnings outlook
questionable, some defensiveness in the Portfolio strategy seems warranted. The
Portfolio is overweight in financial stocks, telephones and international oils.
These groups have above average dividend yields, should have increased earnings
in 1996, and are generally less sensitive to the economy.
If the Fed continues to ease, the Portfolio will likely increase exposure
to cyclical stocks. The auto, credit sensitive financials, building related and
retail stocks are among early consumer cyclicals which generally do well when
the Fed is easing. We reduced holdings of basic materials and capital spending
related stocks when monetary policy turned restrictive and the economy weakened.
These groups have corrected, are once again reasonably valued, and have had most
of the excess expectations taken out of them. Sometime in 1996, these cyclicals
should again be emphasized in the Portfolio.
Healthcare has been a major holding, but many of the drug stocks have moved
and can no longer be bought, and in some cases, will likely be sold due to our
yield discipline. The group continues to look attractive, but this
attractiveness has not gone undiscovered.
The market is at new high absolute levels and is selling in historically
rich valuation territory. Based on history, the market has looked overvalued for
much of the past year, especially the dividend yield and price to book value.
Measures based on earnings and interest rates look a bit better, but most
investor's concern has centered on overall market valuation. Conditions have
been favorable, but the market already knows it.
If everything works out, fiscal conservatism becomes the new political
reality, and a credible budget deal is arrived at, then interest rates could
continue to decline. This much more positive political environment could justify
a new high level of valuation for the market, at least compared with the recent
past. This Portfolio with its heavy weight in interest sensitive stocks, should
participate in any ensuing upward move in the market. Although the basic
strategy is currently defensive, some of these defensive groups (financials,
utilities, and oils) have offensive characteristics in a slow growth, low
inflation environment.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENTS IN
MONY SERIES FUND, INC. EQUITY INCOME PORTFOLIO AND TOTAL RETURN ON S&P 500 INDEX
[INSERT CHART]
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. ASSUMES REINVESTMENT OF
DIVIDENDS.
8
<PAGE> 11
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Securities, at value (cost $13,736,293) (Note 2)................................ $18,037,659
Cash............................................................................ 72,379
Receivable for fund shares sold................................................. 9
Dividends receivable............................................................ 38,933
-----------
Total assets.......................................................... 18,148,980
-----------
LIABILITIES
Payable for fund shares redeemed................................................ 35,726
Accrued expenses:
Investment advisory fees...................................................... 6,184
Custodian fees................................................................ 1,447
Professional fees............................................................. 10,470
Insurance fees................................................................ 4,118
-----------
Total liabilities..................................................... 57,945
-----------
Net assets...................................................................... $18,091,035
==========
Net assets consist of:
Capital stock--authorized 150,000,000 shares of $.01 par value; outstanding,
922,757 shares............................................................. $ 9,228
Additional paid-in capital.................................................... 13,751,975
Undistributed net investment income........................................... 28,990
Distributions in excess of realized capital gains............................. (524)
Net unrealized appreciation of investments.................................... 4,301,366
-----------
Total net assets...................................................... $18,091,035
==========
Net asset value per share of outstanding capital stock ($18,091,035/922,757
shares)....................................................................... $19.61
======
</TABLE>
See notes to financial statements.
9
<PAGE> 12
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Investment income:
Dividends................................................................... $ 524,805
Interest.................................................................... 178,726
----------
Total investment income................................................ 703,531
----------
Expenses:
Investment advisory fees (Note 3)........................................... 68,915
Custodian fees.............................................................. 9,342
Professional fees........................................................... 10,071
Director fees............................................................... 4,104
Miscellaneous fees.......................................................... 3,648
----------
Total expenses....................................................... 96,080
Expense reduction.................................................... (769)
----------
Net expenses......................................................... 95,311
----------
Net investment income............................................................ 608,220
----------
Realized and unrealized gain on investments (Note 2):
Realized gain from security transactions:
Proceeds from sales.................................................... 3,873,059
Cost of securities sold................................................ 3,508,043
----------
Net realized gain on investments................................................. 365,016
Net increase in unrealized appreciation of investments........................... 3,968,525
----------
Net realized and unrealized gain on investments.................................. 4,333,541
----------
Net increase in net assets resulting from operations............................. $4,941,761
==========
</TABLE>
See notes to financial statements.
10
<PAGE> 13
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
------------ -------------
<S> <C> <C>
From operations:
Net investment income........................................ $ 608,220 $ 2,839,111
Net realized gain on investments (Note 2).................... 365,016 18,303,505
Net increase (decrease) in unrealized appreciation of
investments................................................. 3,968,525 (21,708,034)
------------ ------------
Net increase (decrease) in net assets resulting from operations... 4,941,761 (565,418)
------------ ------------
Dividends and distributions to shareholders from:
Net investment income
($.65 and $.64 per share) (Note 4)......................... (567,903) (628,966)
Net realized gain from investment transactions
($.41 and $.39 per share) (Note 4)......................... (365,016) (377,073)
------------ ------------
Total dividends and distributions................................. (932,919) (1,006,039)
------------ ------------
From capital stock transactions:
Proceeds from issuance of shares
(26,583 and 1,068,394 shares) (Note 5)..................... 489,847 17,693,623
Proceeds from dividends and distributions reinvested
(47,574 and 64,780 shares) (Note 4)........................ 932,919 1,006,039
Net asset value of shares redeemed
(195,103 and 9,301,832 shares)............................. (3,545,498) (152,253,591)
------------ ------------
Net decrease in net assets resulting from capital stock
transactions.................................................... (2,122,732) (133,553,929)
------------ ------------
Net increase (decrease) in net assets............................. 1,886,110 (135,125,386)
Net assets beginning of year...................................... 16,204,925 151,330,311
------------ ------------
Net assets end of year (including undistributed net investment
income of $28,990 and $0, respectively)......................... $ 18,091,035 $ 16,204,925
============ ============
</TABLE>
See notes to financial statements.
11
<PAGE> 14
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
- -------- -----------
<S> <C> <C>
COMMON STOCKS--94.7%
AEROSPACE/DEFENSE--2.1%
3,000 Northrop Grumman Corp. ............................................... $ 192,000
2,000 United Technologies Corp. ............................................ 189,750
----------
381,750
----------
AUTOMOBILES--1.4%
2,500 Chrysler Corp. ....................................................... 138,438
4,000 Ford Motor, Co. ...................................................... 116,000
----------
254,438
----------
AUTO PARTS--1.3%
8,000 Dana Corp. ........................................................... 234,000
----------
BANKS--2.7%
3,000 Bank of New York Co., Inc. ........................................... 146,250
2,000 Bankamerica Corp. .................................................... 129,500
2,000 Chase Manhattan Corp. ................................................ 121,250
1,500 Chemical Banking Corp. ............................................... 88,125
----------
485,125
----------
BANK/REGIONAL--3.0%
3,500 Banc One, Corp. ...................................................... 132,125
1,500 First Interstate Bancorp.............................................. 204,750
2,500 First Union Corp. .................................................... 139,063
1,000 Nationsbank Corp. .................................................... 69,625
----------
545,563
----------
CHEMICALS--3.3%
700 Dow Chemical Co. ..................................................... 49,262
2,500 duPont (E.I.) de Nemours & Co. ....................................... 174,688
2,000 Monsanto Co. ......................................................... 245,000
500 Olin Corp. ........................................................... 37,125
3,000 Witco Corp. .......................................................... 87,750
----------
593,825
----------
</TABLE>
See notes to financial statements.
12
<PAGE> 15
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
- -------- ----------
<S> <C> <C>
CONGLOMERATES--4.2%
3,000 Gatx Corp. ........................................................... $ 145,875
3,000 General Signal Corp. ................................................. 97,125
3,000 Harsco Corp. ......................................................... 174,375
8,000 Ogden Corp. .......................................................... 171,000
2,500 Textron Inc. ......................................................... 168,750
----------
757,125
----------
COSMETICS--1.2%
3,000 Avon Products, Inc. .................................................. 226,125
----------
DRUGS--10.9%
2,500 American Home Products Corp. ......................................... 242,500
5,000 Baxter International, Inc. ........................................... 209,375
2,000 Bristol Myers Squibb Co............................................... 171,750
4,000 Merck and Co., Inc. .................................................. 263,000
4,000 Pfizer Inc. .......................................................... 252,000
5,000 Pharmacia & Upjohn Inc. .............................................. 193,750
4,000 Schering-Plough Corp. ................................................ 219,000
4,000 Smithkline Beecham P.L.C. ............................................ 222,000
2,000 Warner Lambert Co..................................................... 194,250
----------
1,967,625
----------
ELECTRICAL EQUIPMENT--3.5%
3,000 Emerson Electric Co................................................... 245,250
4,500 General Electric, Co.................................................. 324,000
1,000 Hubbel, Inc. ......................................................... 65,750
----------
635,000
----------
ELECTRONICS--3.2%
2,000 AMP, Inc. ............................................................ 76,750
3,000 Harris Corp. ......................................................... 163,875
3,000 Honeywell Inc. ....................................................... 145,875
2,500 Thomas & Betts, Corp. ................................................ 184,375
----------
570,875
----------
FOOD--0.3%
1,000 General Mills, Inc. .................................................. 57,750
----------
FOREST PRODUCTS--0.8%
3,500 Weyerhaeuser Co....................................................... 151,375
----------
HOSPITAL MANAGEMENT--1.0%
4,000 U.S. Health Care Inc. ................................................ 186,000
----------
</TABLE>
See notes to financial statements.
13
<PAGE> 16
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
- -------- ----------
<S> <C> <C>
INSURANCE--4.4%
3,000 Aetna Life & Casualty Co.............................................. $ 207,750
4,000 Allstate Corp. ....................................................... 164,500
2,000 CIGNA Corp. .......................................................... 206,500
4,000 Lincoln National Corp. ............................................... 215,000
----------
793,750
----------
MACHINERY--3.2%
2,500 Cooper Industries, Inc. .............................................. 91,875
6,000 Deere & Co............................................................ 211,500
4,000 Goulds Pumps, Inc. ................................................... 100,000
1,000 Hardinge Brothers, Inc. .............................................. 26,000
3,800 Timken Co............................................................. 145,350
----------
574,725
----------
METALS--1.8%
4,000 Carpenter Technology Corp. ........................................... 164,500
6,000 Freeport McMoRan Copper and Gold, Inc. ............................... 168,000
----------
332,500
----------
MISCELLANEOUS--2.9%
3,500 Grace (W.R) & Co. .................................................... 206,938
2,500 Minnesota Mining & Manufacturing Co. ................................. 165,625
3,000 Tenneco, Inc. ........................................................ 148,875
----------
521,438
----------
MISCELLANEOUS FINANCE--2.5%
5,000 American Express Co. ................................................. 206,875
2,000 Federal National Mortgage Assn. ...................................... 248,250
----------
455,125
----------
OFFICE & BUSINESS EQUIPMENT--2.3%
3,000 Pitney-Bowes, Inc. ................................................... 141,000
2,000 Xerox Corp. .......................................................... 274,000
----------
415,000
----------
OIL--DOMESTIC--2.0%
1,800 Amoco, Corp. ......................................................... 129,375
1,500 Atlantic Richfield Co. ............................................... 166,125
3,000 Occidental Petroleum Corp. ........................................... 64,125
----------
359,625
----------
</TABLE>
See notes to financial statements.
14
<PAGE> 17
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
- -------- ----------
<S> <C> <C>
OIL--INTERNATIONAL--5.8%
1,000 British Petroleum..................................................... $ 102,125
4,000 Chevron, Corp. ....................................................... 210,000
2,500 Exxon Corp. .......................................................... 200,313
1,500 Mobil Corp. .......................................................... 168,000
1,500 Royal Dutch Petroleum Co. ............................................ 211,687
2,000 Texaco, Inc. ......................................................... 157,000
----------
1,049,125
----------
OIL-SERVICE & DRILLING--2.4%
3,000 Dresser Industries, Inc. ............................................. 73,125
2,000 Halliburton Co. ...................................................... 101,250
2,000 McDermott International, Inc. ........................................ 44,000
5,000 Williams (The) Companies Inc. ........................................ 219,375
----------
437,750
----------
PAPER--1.5%
3,500 Federal Paper Board Co., Inc. ........................................ 181,563
2,000 Union Camp Corp. ..................................................... 95,250
----------
276,813
----------
PHOTOGRAPHY--1.1%
3,000 Eastman Kodak Co. .................................................... 201,000
----------
PUBLISHING--3.7%
3,000 Dun & Bradstreet Corporation.......................................... 194,250
3,000 McGraw-Hill Companies Inc. ........................................... 261,375
4,000 Readers Digest Assn. Inc. ............................................ 205,000
----------
660,625
----------
RAILROADS--1.9%
2,000 Conrail Inc. ......................................................... 140,000
2,500 Norfolk Southern Corp. ............................................... 198,438
----------
338,438
----------
</TABLE>
See notes to financial statements.
15
<PAGE> 18
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
- -------- ----------
<S> <C> <C>
REAL ESTATE--3.4%
2,000 Avalon Properties Inc. ............................................... $ 43,000
2,000 Bay Apartment Community, Inc. ........................................ 48,500
2,000 Developers Diversified Realty......................................... 60,000
2,000 Equity Residential Properties Trust................................... 61,250
3,200 Felcor Suite Hotels Inc. ............................................. 88,800
5,500 Healthcare Property Investors, Inc. .................................. 193,188
2,000 Healthcare Trust...................................................... 46,000
2,000 Irvine Apartment Communities, Inc. ................................... 38,500
2,000 Redwood Trust Inc. ................................................... 36,500
----------
615,738
----------
RETAIL SALES--0.9%
1,000 Penney (J.C.) Co., Inc. .............................................. 47,625
2,000 May Department Stores Co. ............................................ 84,500
1,000 Sears Roebuck & Co. .................................................. 39,000
----------
171,125
----------
SAVINGS & LOANS--2.2%
7,000 Ahmanson (H.F.) & Co. ................................................ 185,500
8,000 Great Western Financial Corp. ........................................ 204,000
----------
389,500
----------
TOBACCO--2.2%
3,000 American Brands Inc. ................................................. 133,875
3,000 Philip Morris Companies, Inc. ........................................ 271,500
----------
405,375
----------
UTILITIES--ELECTRIC--2.9%
3,000 American Electric Power Co. Inc. ..................................... 121,500
4,000 Carolina Power & Light Co. ........................................... 138,000
3,000 FPL Group, Inc. ...................................................... 139,125
5,000 Southern Co. ......................................................... 123,125
----------
521,750
----------
</TABLE>
See notes to financial statements.
16
<PAGE> 19
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
- -------- -----------
<S> <C> <C>
UTILITIES--TELEPHONE--8.7%
3,000 Ameritech Corp. ...................................................... $ 177,000
2,500 Bell Atlantic Corp. .................................................. 167,185
4,000 Bellsouth Corp. ...................................................... 174,000
4,000 GTE Corp. ............................................................ 176,000
2,500 NYNEX Corp. .......................................................... 135,000
5,000 Pacific Telesis Group................................................. 168,125
3,000 SBC Communications Inc. .............................................. 172,500
4,000 Sprint, Corp. ........................................................ 159,500
5,000 U.S. West Inc. ....................................................... 178,750
3,500 U.S. West Media Group................................................. 66,500
----------
1,574,560
----------
Total Common Stocks (cost $12,839,172)................................ 17,140,538
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- --------
<S> <C> <C>
COMMERCIAL PAPER--4.4%
$400,000 Chevron Oil Finance Co., 5.75%, due 01/12/96.......................... 399,297
400,000 Household Finance Corp., 5.77%, due 01/26/96.......................... 398,397
-----------
Total Commercial Paper (cost $797,694)................................ 797,694
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS--0.6%
100,000 Federal National Mortgage Assn., 5.43%, due 02/08/96.................. 99,427
-----------
Total U.S. Government Agency Obligations (cost $99,427)............... 99,427
-----------
Total Investments (cost $13,736,293)........................ 99.7% 18,037,659
Other Assets less Liabilities............................... 0.3% 53,376
----- -----------
Net Assets.................................................. 100.0% $18,091,035
===== ==========
</TABLE>
The aggregate cost of securities for federal income tax purpose at December 31,
1995 is $13,741,323.
<TABLE>
<S> <C>
The following amounts are based on costs for federal income tax purposes:
Aggregate gross unrealized appreciation................................ $4,359,024
Aggregate gross unrealized depreciation................................ (62,688)
----------
Net unrealized appreciation............................................ $4,296,336
==========
</TABLE>
- ---------------
Percentages are based on net assets.
See notes to financial statements.
17
<PAGE> 20
MONY SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
The MONY Series Fund, Inc. (the "Fund"), a Maryland corporation organized
on December 14, 1984, is composed of seven different portfolios that are, in
effect, separate investment funds: the Equity Growth Portfolio, the Equity
Income Portfolio, the Intermediate Term Bond Portfolio, the Long Term Bond
Portfolio, the Government Securities Portfolio, the Money Market Portfolio, and
the Diversified Portfolio. The Fund issues a separate class of capital stock for
each portfolio. Each share of capital stock issued with respect to a portfolio
will have a pro-rata interest in the assets of that portfolio and will have no
interest in the assets of any other portfolio. Each portfolio bears its own
liabilities and also its proportionate share of the general liabilities of the
Fund. The Fund is registered under the Investment Company Act of 1940 (the "1940
Act") as an open end, diversified, management investment company. This
registration does not imply any supervision by the Securities and Exchange
Commission over the Fund's management. The Equity Income Portfolio is presented
here since it is the only portfolio available to the Individual Plans of the
Keynote Series Account ("Keynote").
2. SIGNIFICANT ACCOUNTING POLICIES
A. Portfolio Valuations:
Short-term securities are valued at amortized cost. The amortized cost of a
security is determined by valuing it at original cost and thereafter amortizing
any discount or premium at a constant rate until maturity.
Common stocks traded on national securities exchanges are valued at the
last sales price as of the close of the New York Stock Exchange or at the last
bid price for over-the-counter securities.
All other securities, when held by the Fund, including any restricted
securities, are valued at their fair value as determined in good faith by the
Board of Directors.
B. Federal Income Taxes:
Each portfolio of the Fund is a separate entity for federal income tax
purposes and intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore, no federal income tax provision
is required.
C. Security Transactions and Investment Income:
Security transactions are recorded as of the trade date.
Dividend income is recorded on the ex-dividend date, income from other
investments is accrued as earned.
Realized gains and losses from investments sold are determined on the basis
of indentified cost for accounting and federal income tax purposes.
D. Other
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosure of liabilities at
the date of the financial satements and the reported amounts of expenses during
the reporting period. Actual results could differ from these estimates.
Earnings credits received from the custodian are shown as a reduction of
total expenses.
18
<PAGE> 21
MONY SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENT ADVISORY FEES AND RELATED PARTY TANSACTIONS
Under an investment Advisory Agreement between the Fund and MONY Life
Insurance Company of America ("Investment Adviser" or "MONY America"), a
wholly-owned subsidiary of The Mutual Life Insurance Company of New York
("MONY"), the Investment Adviser provides investment advice and related services
for each of the Fund's portfolios, administers the overall day-to-day affairs of
the Fund, bears all expenses associated with calculating net asset values of the
portfolios and compensates the directors, officers and employees of the Fund who
are affiliated with the Investment Adviser.
For these services, the Investment Adviser receives an investment
management fee. The fee is a daily charge equal to an annual rate of .40% of the
first $400,000,000 of the aggregate average daily net assets of the portfolios,
.35% of the next $400,000,000 of the aggregate average daily net assets of the
portfolios and .30% of the aggregate average daily net assets of the portfolios
in excess of $800,000,000. Each daily charge is divided among the portfolios in
proportion to their net assets on that date. The Investment Adviser reimburses
the portfolios for investment management fees charged to the extent that any
portfolio's aggregate ordinary operating expense (excluding interest, taxes,
brokerage fees and commissions, and extraordinary expenses) exceeds in any
fiscal year 2.5% of the first $30,000,000 of the average daily net assets of
such portfolio, 2.0% of the next $70,000,000 of the average daily net assets of
such portfolio, and 1.5% of the average daily net assets of the portfolio in
excess of $100,000,000. For the year ended December 31, 1995, the fee incurred
by the Equity Income Portfolio was $68,915.
The Investment Adviser has a service agreement with MONY to provide it with
personnel, services, facilities, supplies and equipment in order to carry out
its duties to provide investment management services under the Investment
Advisory Agreement. The Investment Adviser will pay MONY for its services.
Aggregate renumeration incurred to non-affiliated Directors of the Fund for
the year ended December 31, 1995, amounted to $4,104 for the Equity Income
Portfolio.
4. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Dividends from investment income of the Equity Income Portfolio will
normally be declared and reinvested annually in additional full and fractional
shares.
The Fund will declare and distribute annually, before the close of its
fiscal year, dividends from net realized capital gains.
Dividends from net investment income and distributions from net realized
capital gains are determined in accordance with U.S. federal income tax
regulations which may differ from generally accepted accounting principles.
Distributions may differ from net investment income and net realized capital
gains recognized for financial reporting purposes due to timing differences,
primarily the deferral of wash sales, and post-October losses.
During the year ended December 31, 1995, the fund increased paid-in-capital
by $6,821, decreased undistributed net investment income by $11,327 and
increased accumulated net realized capital gains by $4,506. These differences
are due to return of capital distributions received by the Fund on portfolio
securities.
5. CAPITAL STOCK
A. Authorized Capital Stock:
The Fund has 2 billion authorized shares of capital stock with a par value
of $.01 per share. 1.15 billion shares are reserved for issuance and divided
into seven classes as follows: Equity Growth Portfolio (150 million shares);
Equity Income Portfolio (150 million shares); Intermediate Term Bond Portfolio
19
<PAGE> 22
MONY SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(150 million shares); Long Term Bond Portfolio (150 million shares); Government
Securities Portfolio (150 million shares); Money Market Portfolio (250 million
shares); and Diversified Portfolio (150 million shares). The remaining shares
will be issued to any new or existing class upon approval of the Board of
Directors.
Each outstanding share of captial stock has a pro-rata interest in the
assets of the Portfolio to which the capital stock of that class relates and has
no interest in the assets of any other portfolio.
B. Purchases of Fund Shares:
Shares of the Fund are sold to MONY America and MONY for allocation to MONY
America Variable Account L and MONY Variable Account L to fund benefits under
Flexible Premium Variable Life Insurance Contracts; to MONY America Variable
Account S and MONY Variable Account S to fund benefits under Variable Life
Insurance with Additional Premium Option Contracts; and to MONY America Variable
Account A and MONY Variable Account A, to fund benefits under Flexible Payment
Variable Annuity Contracts issued by those companies. Shares of the Fund are
also sold to MONY for allocation to Keynote to fund benefits under Individual
Plans issued by MONY.
6. PURCHASES AND SALES OF INVESTMENTS
The aggregate cost of investments purchased and proceeds from sales or
maturities, other than short-term investments, for the year ended December 31,
1995 were $3,946,356 and $3,873,059, respectively.
7. KEYNOTE SERIES ACCOUNT REDEMPTION
On June 24, 1994, pursuant to an exemptive order granted by the Securities
and Exchange Commission dated June 8, 1994, the Group Plans in the Keynote
Series Account effected a substitution of all its shares in the MONY Series
Fund, Inc. for interests in Diversified Investors Portfolios, a diversified open
end management investment company which was organized as a trust under the laws
of the state of New York. The substitution was effected through a redemption of
assets-in-kind and was deemed a non-taxable event for Keynote and the Fund. The
net assets redeemed from the Fund were $138,419,403.
The substitution resulted in a permanent difference between tax and
financial statement reporting. Accordingly, $17,893,033 and $2,248,575 have been
reclassified from undistributed net investment income and accumulated
undistributed realized gains, respectively, to additional paid in capital.
20
<PAGE> 23
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
----------- ----------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 15.53 $ 16.43 $ 15.56 $ 14.64 $ 12.70 $ 14.26
----------- ----------- ------------ ------------ ------------ -----------
Income from investment operations
Net investment income................. 0.69 0.64 0.52 0.59 0.64 0.54
Net gains (losses) on investments
(both realized and unrealized)...... 4.45 (0.51) 1.68 0.92 1.94 (1.50)
----------- ----------- ------------ ------------ ------------ -----------
Total from investment operations.... 5.14 0.13 2.20 1.51 2.58 (0.96)
Less distributions
Dividends (from net investment
income)............................. (0.65) (0.64) (0.52) (0.59) (0.64) (0.60)
Distributions (from realized capital
gains).............................. (0.41) (0.39) (0.81) 0.00* 0.00* 0.00
----------- ----------- ------------ ------------ ------------ -----------
Total distributions................. (1.06) (1.03) (1.33) (0.59) (0.64) (0.60)
Net asset value, end of year............ $ 19.61 $ 15.53 $ 16.43 $ 15.56 $ 14.64 $ 12.70
=========== =========== ============ ============ ============ ===========
Total return........................ 33.12% 0.78% 14.14% 10.31% 20.31% (6.73%)
Ratios/Supplemental Data
Net assets, end of year................. $18,091,035 $16,204,925 $151,330,311 $121,540,392 $118,114,947 $99,878,151
Ratio of net investment income to
average net assets.................... 3.54% 3.53% 3.22% 3.68% 4.46% 5.39%
Ratio of expenses to average net
assets................................ 0.56% 0.48% 0.46% 0.46% 0.49% 0.52%
Portfolio turnover rate................. 26.80% 32.48% 28.48% 35.62% 25.84% 8.89%
<CAPTION>
1989 1988 1987 1986
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 12.67 $ 12.03 $ 13.03 $ 11.30
---------- ---------- ---------- ----------
Income from investment operations
Net investment income................. 0.64 0.70 0.44 0.42
Net gains (losses) on investments
(both realized and unrealized)...... 2.20 1.64 0.54 1.74
---------- ---------- ---------- ----------
Total from investment operations.... 2.84 2.34 0.98 2.16
Less distributions
Dividends (from net investment
income)............................. (0.64) (0.66) (0.77) (0.43)
Distributions (from realized capital
gains).............................. (0.61) (1.04) (1.21) 0.00
---------- ---------- ---------- ----------
Total distributions................. (1.25) (1.70) (1.98) (0.43)
Net asset value, end of year............ $ 14.26 $ 12.67 $ 12.03 $ 13.03
========== ========== ========== ==========
Total return........................ 22.42% 19.45% 7.52% 19.12%
Ratios/Supplemental Data
Net assets, end of year................. $6,185,876 $5,054,514 $2,945,497 $2,776,312
Ratio of net investment income to
average net assets.................... 4.66% 5.24% 3.02% 3.30%
Ratio of expenses to average net
assets................................ 0.88% 0.91% 1.50% 1.50%
Portfolio turnover rate................. 19.55% 22.70% 13.73% 25.70%
</TABLE>
- ---------------
* Less than $.01 per share.
21
<PAGE> 24
MONY SERIES FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
MONY Series Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments of the Equity Income Portfolio (one of
the portfolios constituting MONY Series Fund, Inc.), which is available for
purchase by the Keynote Series Account, as of December 31, 1995, the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the ten years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Equity Income Portfolio of MONY Series Fund, Inc., presented herein, as of
December 31, 1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the ten years in the period then ended,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 16, 1996
22
<PAGE> 25
MONY SERIES FUND, INC.
1740 BROADWAY
NEW YORK, NEW YORK 10019
<TABLE>
<S> <C>
DIRECTORS AND PRINCIPAL OFFICERS
Kenneth M. Levine Chairman, President and Director
Joel Davis Director
Michael J. Drabb Director
Alan J. Hartnick Director
Floyd L. Smith Director
Edward E. Hill Vice President-Compliance
David V. Weigel Treasurer
John P. Keller Controller
Frederick C. Tedeschi Secretary
INVESTMENT ADVISER
MONY Life Insurance Co. of America
1740 Broadway
New York, New York 10019
PRINCIPAL UNDERWRITER AND DISTRIBUTOR
MONY Securities Corp.
1740 Broadway
New York, New York 10019
CUSTODIAN
Chemical Bank
277 Park Avenue
New York, New York 10172
TRANSFER AGENT
The Mutual Life Insurance Co. of
New York
1740 Broadway
New York, New York 10019
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York 10019
</TABLE>
23
<PAGE> 26
KEYNOTE
SERIES
ACCOUNT
MUTUAL OF NEW YORK
One MONY Plaza
PO Box 48-30
Syracuse, New York 13221
The Mutual Life Insurance Company of New York, New York, NY
