<PAGE> 1
[KEY SERIES ACCOUNT LOGO]
LOGO
---------------------------------
MUTUAL OF NEW YORK
---------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1997
<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,
The stock market moved up sharply during the second quarter, setting new
highs in the popular averages. Market breadth also improved as more individual
stocks participated in the upswing. The economic news was very favorable,
creating a return to the "Goldilocks" economy -- not too fast and not too slow.
Inflation news was positive, both the producer and the consumer indices showing
a flat price trend. Interest rates drifted lower, mutual fund inflows continued
and stock prices exploded to the upside.
Everything has gone right on the economic, inflation and interest rate
front. There was even the beginning of a deal on resolving the Federal budget
deficit. All this has not gone unnoticed, and valuations are in historic high
territory. The good news may well justify such valuations and it is possible
that the economy and the markets have entered a new era. However, as the market
has moved higher the tolerance for any slips has decreased. Investors have
substantial profits to protect, 1997 has been better than almost anyone
expected. They will be inclined to move quickly to protect their gains.
At such levels the market will suffer from any deviation from the current
"just right" growth. While a weaker economy would hurt the earnings side, a
stronger than expected economy is also a risk. The market has more to lose from
the negative effects of inflation and interest rates, than from weaker profits.
Stronger growth accompanied by any indication of a prospective inflation
increase would quickly cause the bond market to sell off, pushing long term
rates higher. The Federal Reserve would move to tighten credit and push up short
rates. This would begin to slow the economy, but would increase concern about
overshooting the fine tuning and causing recession. Any benefit the market would
get from better earnings would be tempered by the certainty that those gains
would not last in a more hostile monetary environment.
Most importantly the negative effect of higher rates on valuation models
would overcome any positive earnings impact. Competition from fixed income
alternatives would begin to draw money from stocks.
Current investor desires and expectations are for growth of around 2.5 per
cent, anything significantly higher raises fears of future inflation. It's
possible that this "just right" growth will continue for awhile, but at some
point it's likely to deviate from this perfect path. The stock market has moved
a long way in a short time and some consolidation would not be surprising. A
major decline is not expected as long as growth remains moderate and inflation
is subdued. Under these conditions interest rates should remain stable or
decline improving the relative attractiveness of bonds.
Sincerely,
/s/ KENNETH M. LEVINE
Kenneth M. Levine
Chairman
1
<PAGE> 4
KEYNOTE SERIES ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVA SUBACCOUNT
---------------------------------------
TAX NON-TAX VARIABLE
QUALIFIED QUALIFIED PAYOUTS
----------- ---------- --------
<S> <C> <C> <C>
ASSETS
Investments at cost (Note 4)........................... $ 9,248,377 $2,285,336 $ 8,895
=========== ========== ========
Investments in MONY Series Fund, Inc. at net asset
value (Note 2).................................. $14,443,758 $3,545,164 $ 9,567
Amount due from MONY Series Fund, Inc. ........... 4,565 400 0
Amount due from MONY.............................. 0 0 1,294
----------- ---------- --------
Total assets........................................... 14,448,323 3,545,564 10,861
----------- ---------- --------
LIABILITIES
Amount due to MONY..................................... 4,565 400 0
Amount due to MONY Series Fund, Inc. .................. 0 0 1,294
----------- ---------- --------
Net assets............................................. $14,443,758 $3,545,164 $ 9,567
=========== ========== ========
Net assets consist of:
Contractholders' net payments..................... $ 1,325,915 $ 706,280 $(16,271)
Undistributed net investment income............... 4,795,884 1,030,804 11,697
Accumulated net realized gain on investments...... 3,128,579 528,252 13,469
Unrealized appreciation of investments............ 5,195,381 1,279,828 672
----------- ---------- --------
Net assets............................................. $14,443,759 $3,545,164 $ 9,567
=========== ========== ========
Number of units outstanding*........................... 128,683 33,790 89
----------- ---------- --------
Net asset value per unit outstanding*.................. $ 112.24 $ 104.92 $ 107.98
=========== ========== ========
</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 six months ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVA SUBACCOUNT
----------------------------------------
NON-TAX VARIABLE
TAX-QUALIFIED QUALIFIED PAYOUTS
------------- --------- --------
<S> <C> <C> <C>
Dividend income........................................... $ 1,584,919 $ 374,420 $ 2,364
Mortality and expense risk charges (Note 3)............... 68,016 16,216 0
----------- --------- --------
Net investment income..................................... 1,516,903 358,204 2,364
----------- --------- --------
Realized and unrealized gain (loss) on investments (Note
2):
Proceeds from sales..................................... 1,303,428 158,228 31,056
Cost of shares sold..................................... (773,044) (93,111) (28,728)
----------- --------- --------
Net realized gain on investments.......................... 530,384 65,117 2,328
Net increase (decrease) in unrealized appreciation of
investments............................................. 485,154 185,316 (2,744)
----------- --------- --------
Net realized and unrealized gain (loss) on investments.... 1,015,538 250,433 (416)
----------- --------- --------
Net increase in net assets resulting from operations...... $ 2,532,441 $ 608,637 $ 1,948
=========== ========= ========
</TABLE>
See notes to financial statements.
3
<PAGE> 6
KEYNOTE SERIES ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVA SUBACCOUNT
-------------------------------------------------------------------------------
TAX NON-TAX VARIABLE
QUALIFIED QUALIFIED PAYOUTS
--------------------------- ----------------------- -----------------------
FOR THE FOR THE
FOR THE SIX FOR THE YEAR
FOR THE SIX YEAR ENDED MONTHS YEAR ENDED FOR THE SIX ENDED
MONTHS ENDED DECEMBER ENDED DECEMBER MONTHS ENDED DECEMBER
JUNE 30, 31, JUNE 30, 31, JUNE 30, 31,
1997 1996 1997 1996 1997 1996
------------- ----------- ---------- ---------- ------------ --------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income
(loss)................. $ 1,516,903 $ (104,330) $ 358,204 $ (24,518) $ 2,364 $ 108
Net realized gain on
investments............ 530,384 788,910 65,117 184,140 2,328 5,893
Net increase (decrease)
in unrealized
appreciation of
investments............ 485,154 1,524,818 185,316 354,447 (2,744) 3,387
------------- ----------- ---------- ---------- ---------- --------
Net increase in net assets
resulting from operations...
------------- ----------- ---------- ---------- ---------- --------
FROM UNIT TRANSACTIONS:
Net proceeds from the
issuance of units...... 60,841 135,833 8,918 16,967 8,196 72,049
Net asset value of units
redeemed or used to
meet contract
obligations............ (1,235,461) (2,081,034) (142,011) (496,194) (31,056) (77,195)
------------- ----------- ---------- ---------- ---------- --------
Net decrease from unit
transactions................ (1,174,620) (1,945,201) (133,093) (479,227) (22,860) (5,146)
------------- ----------- ---------- ---------- ---------- --------
Net increase (decrease) in net
assets...................... 1,357,821 264,197 475,544 34,842 (20,912) 4,242
Net assets beginning of
period...................... 13,085,938 12,821,741 3,069,620 3,034,778 30,479 26,237
------------- ----------- ---------- ---------- ---------- --------
Net assets end of period*..... $ 14,443,759 $13,085,938 $3,545,164 $3,069,620 $ 9,567 $ 30,479
============= =========== ========== ========== ========== ========
Units outstanding beginning of
period...................... 140,321 163,054 35,214 41,289 341 352
Units issued during the
period...................... 606 1,633 94 215 81 926
Units redeemed during the
period...................... (12,244) (24,366) (1,518) (6,290) (333) (937)
------------- ----------- ---------- ---------- ---------- --------
Units outstanding end of
period...................... 128,683 140,321 33,790 35,214 89 341
============= =========== ========== ========== ========== ========
* Includes undistributed net
investment income of: $ 4,795,884 $ 3,278,981 $1,030,804 $ 672,600 $ 11,697 $ 9,333
</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.
There is one sub-account which consists of three sub-accounts, two of which
are available to Individual Plans, they all invest in the Equity Income
Portfolio (the "Portfolio") of the MONY Series Fund, Inc. (the "Fund"). The Fund
is registered under the 1940 Act an open end, diversified, management investment
company.
The financial statements of the Portfolio, including the portfolio of
investments, are contained on pages 7 through 15 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 the MONY Series Fund, Inc. at
cost, at June 30, 1997 (unaudited) consist of the following:
<TABLE>
<CAPTION>
IVA SUBACCOUNT
------------------------------------------
TAX NON-TAX VARIABLE
QUALIFIED QUALIFIED PAYOUTS
---------- ---------- ------------
<S> <C> <C> <C>
Shares beginning of period:
Shares............................................ 558,274 130,956 1,300
Amount............................................ $8,375,711 $1,975,108 $ 27,063
---------- ---------- --------
Share acquired:
Shares............................................ 2,634 372 341
Amount............................................ $ 60,791 $ 8,919 $ 8,196
Shares received for reinvestment of dividends:
Shares............................................ 73,717 17,415 110
Amount............................................ $1,584,919 $ 374,420 $ 2,364
Shares redeemed:
Shares............................................ (56,181) (6,767) (1,368)
Amount............................................ $ (773,044) $ (93,111) $(28,728)
---------- ---------- --------
Net change:
Shares............................................ 20,170 11,020 (917)
Amount............................................ $ 872,666 $ 290,228 $(18,168)
---------- ---------- --------
Shares end of period:
Shares............................................ 578,444 141,976 383
Amount............................................ $9,248,377 $2,265,336 $ 8,895
========== ========== ========
</TABLE>
6
<PAGE> 9
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
Looking out into the second half with the expectation of slower growth, it
seems that earnings gains will be more difficult to come by. Reduced consumer
spending, lack of pricing power, lower revenues and the fact that most of the
easy cost cutting has already taken place will limit earnings. This same set of
circumstances should also produce lower interest rates, aiding valuations, but
it means that stock selection will be more important in a tougher earnings
environment. After a very strong first half, a somewhat defensive posture seems
warranted.
Defensive sectors which are being emphasized are the telephones, some
international oils and diversified natural gas companies. Some areas which look
to have relatively more stable earnings include healthcare and financial
services. The final areas of emphasis -- sectors and companies which do not seem
to be over extended and overexploited -- mainly fall in the economy sensitive
areas. These include capital goods such as machinery and diversified
manufacturing as well as basic materials, including forest products, paper and
metals.
These areas represent value as typified by above average yields. They have
not all been outperformers to date, and expectations are not as high as in many
of the market leaders. This strategy of being relatively fully invested respects
the power of the fund inflows. It also recognizes though, that the market has
been going up for a long time, and that valuations of the market are high, and
that expectations for market favorites are even higher. The risks have increased
and some defensiveness is in order.
7
<PAGE> 10
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Securities, at value (Note 2)*.................................................. $20,499,366
Cash............................................................................ 90,267
Dividends receivable............................................................ 31,447
Interest receivable............................................................. 536
Receivable for fund shares sold................................................. 1,466
Receivable for securities sold.................................................. 119,830
Prepaid expense................................................................. 1,174
-----------
Total assets.......................................................... 20,744,086
-----------
LIABILITIES
Payable for fund shares redeemed................................................ 5,662
Payable for securities purchased................................................ 30,497
Accrued expenses:
Investment advisory fees................................................... 7,006
Custodian fees............................................................. 855
Professional fees.......................................................... 7,382
Miscellaneous fees......................................................... 1,983
-----------
Total liabilities..................................................... 53,385
-----------
Net assets...................................................................... $20,690,701
===========
Net assets consist of:
Capital stock-$.01 par value............................................... $ 8,288
Additional paid-in capital................................................. 11,610,449
Undistributed net investment income........................................ 216,743
Undistributed net realized gain on investments............................. 1,290,875
Net unrealized appreciation of investments................................. 7,564,346
-----------
Net assets...................................................................... $20,690,701
===========
Shares of capital stock outstanding............................................. 828,759
-----------
Net asset value per share of outstanding capital stock.......................... $ 24.97
===========
*Investments at cost............................................................ $12,935,020
</TABLE>
See notes to financial statements.
8
<PAGE> 11
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................................... $ 13,919
Dividends................................................................... 252,719
----------
Total investment income................................................ 266,638
----------
EXPENSES:
Investment advisory fees (Note 3)........................................... 38,734
Custodian fees.............................................................. 4,455
Professional fees........................................................... 4,075
Directors fees.............................................................. 1,454
Miscellaneous fees.......................................................... 1,177
----------
Total expenses......................................................... 49,895
----------
Net investment income............................................................ 216,743
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 2):
Realized gain from security transactions (excluding short-term securities):
Proceeds from sales.................................................... 4,123,894
Cost of securities sold................................................ 2,843,999
----------
Net realized gain on investments................................................. 1,279,895
Net increase in unrealized appreciation of investments........................... 2,205,133
----------
Net realized and unrealized gain on investments.................................. 3,485,028
----------
Net increase in net assets resulting from operations............................. $3,701,771
==========
</TABLE>
See notes to financial statements.
9
<PAGE> 12
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS YEAR ENDED
ENDED DECEMBER
JUNE 30, 31,
1997 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
From operations:
Net Investment income........................................ $ 216,743 $ 506,646
Net realized gain on investments (Note 2).................... 1,279,895 1,744,115
Net increase in unrealized appreciation of investments....... 2,205,133 1,057,847
----------- -----------
Net increase in net assets resulting from operations.............. 3,701,771 3,308,608
----------- -----------
Dividends and distributions to shareholders from:
Net investment income (Note 4)............................... 774,467 34,413
Net realized gain from investment transactions (Note 4)...... 1,471,218 0
----------- -----------
Total dividends and distributions to shareholder........ 2,245,685 34,413
----------- -----------
From share transactions:
Proceeds from the issuance of shares......................... 141,008 427,851
Proceeds from dividends reinvested........................... 2,245,685 34,413
Net asset value of shares redeemed........................... (1,724,425) (3,255,147)
----------- -----------
Net increase (decrease) in net assets resulting from share
transactions.................................................... 662,268 (2,792,883)
----------- -----------
Net increase in net assets........................................ 2,118,354 481,312
Net assets beginning of period.................................... 18,572,347 18,091,035
----------- -----------
Net assets end of period*......................................... $20,690,701 $18,572,347
=========== ===========
Shares issued and redeemed:
Issued....................................................... 5,986 20,290
Issued in reinvestment of dividends and distributions........ 104,451 1,654
Redeemed..................................................... (73,871) (152,508)
----------- -----------
Net increase (decrease)................................. 36,566 (130,564)
=========== ===========
* Including undistributed net investment income of: $216,743 $500,290
</TABLE>
See notes to financial statements.
10
<PAGE> 13
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 98.2%
- -------------------------------------------------
AEROSPACE/DEFENSE -- 2.1%
Northrop Grumman Corp. 2,000 $ 175,624
United Technologies Corp. 3,000 249,000
----------
424,624
----------
AUTOMOBILES -- 1.2%
Ford Motor Co. 3,000 113,250
General Motors Corp. 2,500 139,218
----------
252,468
----------
AUTOMOTIVE PARTS -- 2.2%
Dana Corp. 6,000 228,000
Eaton Corp. 2,500 218,280
----------
446,280
----------
BANKS/MONEY CENTERS -- 3.9%
Bank of New York Co., Inc. 4,000 174,000
BankAmerica Corp. 4,000 258,248
Bankers Trust New York Corp. 2,000 174,000
Chase Manhattan Corp. 2,000 194,124
----------
800,372
----------
BANKS/REGIONAL -- 2.8%
First Union Corp. 2,500 231,250
NationsBank Corp. 4,000 258,000
Wells Fargo & Co. 300 80,850
----------
570,100
----------
CHEMICALS -- 3.6%
du Pont (E.I.) de Nemours &
Co. 6,000 377,250
Monsanto Co. 5,000 215,310
Olin Corp. 4,000 156,248
----------
748,808
----------
CONGLOMERATES -- 2.9%
General Signal Corp. 4,000 174,500
Harsco Corp. 4,000 162,000
Textron Inc. 4,000 265,500
----------
602,000
----------
COSMETICS -- 1.2%
Avon Products, Inc. 3,500 246,967
----------
DRUGS -- 10.3%
American Home Products Corp. 3,000 229,500
Baxter International, Inc. 4,000 209,000
Bristol Myers Squibb Co. 3,500 283,499
Lilly (Eli) & Co. 2,500 273,280
Merck and Co., Inc. 2,500 258,750
Schering-Plough Corp. 4,000 191,500
Smithkline Beecham P.L.C. 3,500 320,688
Warner Lambert Co. 3,000 372,750
----------
2,138,967
----------
ELECTRICAL EQUIPMENT -- 4.8%
Emerson Electric Co. 6,000 330,372
General Electric Co. 10,000 653,750
----------
984,122
----------
ELECTRONICS -- 3.2%
AMP Inc. 6,000 250,500
Honeywell Inc. 2,500 189,688
Thomas & Betts Corp. 4,000 210,248
----------
650,436
----------
FOREST PRODUCTS -- 2.0%
Georgia Pacific Corp. 2,500 213,438
Weyerhaeuser Co. 4,000 208,000
----------
421,438
----------
HOSPITAL MANAGEMENT -- 0.7%
Aetna Inc. 1,500 153,563
----------
INSURANCE -- 3.1%
CIGNA Corp. 1,500 266,250
Lincoln National Corp. 3,000 193,125
St. Paul Co., Inc. 2,500 190,624
----------
649,999
----------
MACHINERY -- 3.7%
Cooper Industries, Inc. 4,000 199,000
Deere & Co. 5,000 274,375
Timken Co. 8,000 284,496
----------
757,871
----------
METALS -- 3.4%
Carpenter Technology Corp. 3,000 137,250
Freeport McMoRan Copper &
Gold, Inc. 3,500 102,375
Phelps Dodge Corp. 2,500 212,968
Reynolds Metals Co. 3,500 249,375
----------
701,968
----------
MISCELLANEOUS -- 1.4%
Minnesota Mining &
Manufacturing Co. 2,000 204,000
Public Storage 3,000 87,750
----------
291,750
----------
MISCELLANEOUS FINANCE -- 1.9%
American Express Co. 3,000 223,500
Federal National Mortgage
Assn. 4,000 174,500
----------
398,000
----------
NATURAL GAS DIVERSIFIED -- 3.4%
Consolidated Natural Gas Co. 3,000 161,436
El Paso Natural Gas 3,200 176,000
MCM Energy Group 1,000 30,625
Questar Corp. 4,000 161,500
Sonat Inc. 3,500 179,375
----------
708,936
----------
OFFICE & BUSINESS EQUIPMENT -- 2.5%
Pitney-Bowes, Inc. 3,000 208,500
Xerox Corp. 4,000 315,500
----------
524,000
----------
OIL -- DOMESTIC -- 1.7%
Amoco, Corp. 2,500 217,343
Atlantic Richfield Co. 2,000 141,000
----------
358,343
----------
</TABLE>
See notes to financial statements.
11
<PAGE> 14
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
OIL -- INTERNATIONAL -- 6.6%
British Petroleum 3,000 $ 224,625
Chevron, Corp. 2,500 184,843
Exxon Corp. 5,000 307,500
Mobil Corp. 3,000 209,625
Royal Dutch Petroleum Co. 4,000 217,500
Texaco, Inc. 2,000 217,500
---------------
1,361,593
---------------
OIL -- SERVICE &
DRILLING -- 2.6%
Dresser Industries Inc. 6,000 223,500
Williams (The) Companies, Inc. 7,000 306,250
---------------
529,750
---------------
PAPER -- 1.9%
International Paper Co. 4,000 194,248
Union Camp Corp. 4,000 200,000
---------------
394,248
---------------
PHOTOGRAPHY -- 0.7%
Eastman Kodak Co. 2,000 153,500
---------------
PUBLISHING -- 1.1%
McGraw-Hill Companies,Inc. 4,000 235,248
---------------
RAILROADS -- 2.0%
Norfolk Southern Corp. 2,000 201,500
Union Pacific Co. 3,000 211,500
---------------
413,000
---------------
REAL ESTATE -- 3.9%
Bay Apartment Community, Inc. 2,000 74,000
Crescent Operating Inc. 400 4,800
Crescent Real Estate Equities
Inc. 4,000 127,000
Developers Diversified Realty 2,500 100,000
Equity Residential Properties
Trust 2,000 95,000
Felcor Suite Hotels Inc. 3,500 130,375
Health Care Property
Investors, Inc. 5,000 176,250
Irvine Apartment Communities,
Inc. 3,500 102,814
---------------
810,239
---------------
SAVINGS & LOAN -- 2.8%
Ahmanson (H.F.) & Co. 6,000 258,000
Great Western Financial Corp. 6,000 322,500
---------------
580,500
---------------
SOAPS -- 1.6%
Colgate Palmolive Co. 5,000 326,250
---------------
TELECOMMUNICATIONS EQUIPMENT -- 1.2%
Harris Corp. 3,000 252,000
---------------
TOBACCO -- 1.9%
Fortune Brands, Inc 3,500 130,592
Gallaher Group P.L.C. 3,500 64,530
Philip Morris Companies, Inc. 4,500 199,688
---------------
394,810
---------------
UTILITIES -- ELECTRIC -- 2.0%
American Electric Power Co.,
Inc. 3,000 126,000
Carolina Power & Light Co. 4,000 143,500
FPL Group, Inc. 3,000 138,186
---------------
407,686
---------------
UTILITIES -- TELEPHONE -- 7.9%
Ameritech Corp. 3,500 237,780
Bell Atlantic Corp. 3,500 265,562
Bellsouth Corp. 4,500 208,687
GTE Corp. 4,000 175,500
NYNEX Corp. 2,000 115,250
SBC Communications Inc. 5,000 309,375
Sprint, Corp. 4,000 210,500
U.S. West Communications Inc. 3,000 113,057
---------------
1,635,711
---------------
TOTAL COMMON STOCKS
(COST $12,761,201) 20,325,547
- -----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
-------------------
<S> <C> <C>
COMMERCIAL PAPER -- 0.9%
- -----------------------------------------------------------------------------
General Electric Co.,
5.52%, due 07/25/97
(cost $173,819) $ 175,000 $ 173,819
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $12,935,020) 99.1% $ 20,499,366
OTHER ASSETS LESS LIABILITIES -- 0.9% 191,335
- -----------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 20,690,701
=============================================================================
</TABLE>
The aggregate cost of securities for federal income tax purpose at June 30, 1997
is $12,946,000.
The following amounts are based on costs for federal income tax purposes:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation $7,579,003
Aggregate gross unrealized depreciation (3,677)
----------
Net unrealized appreciation $7,575,326
==========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
Percentages are based on net assets.
12
<PAGE> 15
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 Diversified Portfolio, the Government Securities Portfolio, and
the Money Market 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 with 61 days or more to maturity at time of purchase
are valued at market through the 61st day prior to maturity, based on quotations
obtained from market makers or other appropriate sources; thereafter, any
unrealized appreciation or depreciation existing on the 61st day is amortized on
a straight-line basis over the remaining number of days to maturity. Short-term
securities with 60 days or less to maturity at time of purchase 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. Securities in the Money Market Portfolio are valued at
amortized cost.
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 identified 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 of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
3. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
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.
13
<PAGE> 16
MONY SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS (CONTINUED)
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 aggregated 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 will
reimburse the portfolios for investment management fees charged to the extent
that any portfolio's aggregate ordinary operating expenses (excluding interest,
taxes, brokerage fees and commissions, and extraordinary expenses) exceed 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 daily net assets of the portfolio in excess of
$100,000,000. For the six months ended June 30, 1997, the fee incurred by the
Equity Income Portfolio was $38,734.
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 six months ended June 30, 1997, amounted to $1,454 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 net investment income and net realized capital gains, if
any, of the Equity Income Portfolio will normally be declared and reinvested
annually in additional full and fractional shares.
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.
During the year ended December 31, 1996 the Equity Income Portfolio
increased undistributed realized gains by $12,784, decreased undistributed net
invest income by $933 and decreased additional paid-in capital by $11,851. These
differences are primarily due to return of capital distributions received on
investments.
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
(150 million shares); Long Term Bond Portfolio (150 million shares); Diversified
Portfolio (150 million shares); Government Securities Portfolio (150 million
shares); and Money Market Portfolio (250 million shares). The remaining shares
may be issued to any new or existing class upon approval of the Board of
Directors.
B. Purchases of Fund Shares:
Shares of the Fund are sold to MONY Life Insurance Company of America and
MONY for allocation to MONY America Variable Account L and MONY Variable Account
L to fund benefits under Flexible Premium Variable Life and Variable Universal
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 Annuity 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 six months ended June 30,
1997 were $2,935,111 and $4,282,266, respectively.
14
<PAGE> 17
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
------------ ----------- ----------- ----------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................. $ 23.44 $ 19.61 $ 15.53 $ 16.43 15.56 $ 14.64 $ 12.70
----------- ----------- ----------- ----------- ------------ ------------ ------------
Income from investment
operations
Net investment income..... 0.63 0.64 0.69 0.64 0.52 0.59 0.64
Net gains (losses) on
investments (both
realized and
unrealized)............. 3.81 3.23 4.45 (0.51) 1.68 0.92 1.94
Total from investment
operations............ 4.44 3.87 5.14 0.13 2.20 1.51 2.58
----------- ----------- ----------- ----------- ----------- ------------ ------------
Less distributions
Dividends (from net
investment income)...... (1.00) (0.04) (0.65) (0.64) (0.52) (0.59) (0.64)
Distributions (from
realized capital
gains).................. (1.91) 0.00 (0.41) (0.39) (0.81) 0.00* 0.00*
----------- ----------- ----------- ----------- ------------ ------------ ------------
Total distributions..... (2.91) (0.04) (1.06) (1.03) (1.33) (0.59) (0.64)
Net asset value, end of
period.................... $ 24.97 $ 23.44 $ 19.61 $ 15.53 $ 16.43 $ 15.56 $ 14.64
=========== =========== =========== =========== ============ ============ ============
Total return............ 46.71%+ 19.76% 33.12% 0.78% 14.14% 10.31% 20.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period... $20,690,701 $18,572,347 $18,091,035 $16,204,925 $151,330,311 $121,540,392 $118,114,947
Average commission rate..... $ 0.0668 $ 0.0593 N/A N/A N/A N/A N/A
Ratio of net investment
income to average net
assets.................... 1.11% 2.79% 3.54% 3.53% 3.22% 3.68% 4.46%
Ratio of expenses to average
net assets................ 0.26% 0.55% 0.56% 0.48% 0.46% 0.46% 0.49%
Portfolio turnover rate..... 15.59% 29.37% 26.80% 32.48% 28.48% 35.62% 25.84%
<CAPTION>
1990 1989 1988 1987
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period................. $ 14.26 $ 12.67 $ 12.03 $ 13.03
----------- ---------- ---------- ----------
Income from investment
operations
Net investment income..... 0.54 0.64 0.70 0.44
Net gains (losses) on
investments (both
realized and
unrealized)............. (1.50) 2.20 1.64 0.54
Total from investment
operations............ (0.96) 2.84 2.34 0.98
----------- ---------- ------- ----------
Less distributions
Dividends (from net
investment income)...... (0.60) (0.64) (0.66) (0.77)
Distributions (from
realized capital
gains).................. 0.00 (0.61) (1.04) (1.21)
----------- ---------- ---------- ----------
Total distributions..... (0.60) (1.25) (1.70) (1.98)
Net asset value, end of
period.................... $ 12.70 $ 14.26 $ 12.67 $ 12.03
=========== ========== ========== ==========
Total return............ (6.73%) 22.42% 19.45% 7.52%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period... $99,878,151 $6,185,876 $5,054,514 $2,945,497
Average commission rate..... N/A N/A N/A N/A
Ratio of net investment
income to average net
assets.................... 5.39% 4.66% 5.24% 3.02%
Ratio of expenses to average
net assets................ 0.52% 0.88% 0.91% 1.50%
Portfolio turnover rate..... 8.89% 19.55% 22.70% 13.73%
</TABLE>
- ---------------
* Less than $.01 per share.
+ Annualized
15
<PAGE> 18
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<PAGE> 19
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
Chase Manhattan Bank
4 New York Plaza
New York, New York 10004
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>
<PAGE> 20
[KEYNOTE SERIES ACCOUNT LOGO]
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
