<PAGE> 1
V
LOGO
---------------------------------
MUTUAL OF NEW YORK
---------------------------------
ANNUAL REPORT
DECEMBER 31, 1996
<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 macro environment for investors is essentially unchanged from 1996.
Slow growth, low inflation and stable interest rates are expected. There are no
major excesses, except perhaps stock market valuations, which remain in
historically high territory. There does not appear to be any compelling reason,
in the near term at least, for the Federal Reserve to raise rates, except to
reduce market speculation. A much stronger economy would change this neutral
outlook for Fed policy, but that is not expected now.
The primary potential problem area for the market is corporate earnings.
Earnings growth was good in 1996, and combined with lower interest rates, pushed
the market to new highs. In 1997, in a slow growth economy, with companies
having little pricing power, profits are at risk and could turn out to be the
major negative for the 1997 stock market.
Earnings aside, the overall environment must be considered benign to good,
whether it be world events, political developments or economic statistics.
Things may not be great or totally to everyone's liking, but compared with all
the crises faced over the past thirty years, the market today does not have to
deal with major external negatives. All this, of course, has not gone unnoticed
by investors. Sentiment has been very strong, money continues to pour into
mutual funds and expectations are very high, both for profits and the outlook
for stocks.
There is little room for disappointment at today's valuations. Everything
went right last year or was interpreted as going right. Growth was not too fast
and not too slow, and as a result, the market had two very strong driving
forces: lower rates and higher profits. It is unlikely that 1997 will witness
the same combination, something will almost certainly disappoint. Either growth
will be too fast, raising concerns about inflation and Fed tightening; or more
likely, slow enough to raise concerns about earnings growth.
Some disappointment would not be all bad. The expectation is for this year
to be one of consolidation. A flat year would be all right after the recent
strength. The past two, five and ten year periods have been exceptional and
should not be considered the norm. A flat year which included a ten to fifteen
percent correction would not be a surprise, and would be healthy in terms of
cooling some of the excessive expectations. A pause that let the fundamentals
catch up with prices would be good for the market's long term health.
A major decline of twenty percent or more is not anticipated. That is
usually caused by the Federal Reserve tightening credit and raising interest
rates to slow the economy. The usual economic excesses which would cause tighter
monetary policy are not currently present. The Fed could tighten to try to
contain the stock market, but that would probably require both a stronger
economy and a more speculative environment. It is more likely that the chairman
would try to talk the market down as he did recently before tightening monetary
policy.
Sincerely,
LOGO
Kenneth M. Levine
Chairman
1
<PAGE> 4
KEYNOTE SERIES ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVA SUBACCOUNT
--------------------------------------
TAX NON-TAX VARIABLE
QUALIFIED QUALIFIED PAYOUTS
----------- ---------- -------
<S> <C> <C> <C>
ASSETS
Investments at cost (Note 4)............................ $ 8,375,711 $1,975,108 $27,063
=========== ========== =======
Investments in MONY Series Fund, Inc. at net asset
value (Note 2)................................... $13,085,938 $3,069,620 $30,479
Amount due from MONY Series Fund, Inc. ............ 0 0 20,513
----------- ---------- -------
Total assets............................................ 13,085,938 3,069,620 50,992
----------- ---------- -------
LIABILITIES
Amount due to MONY...................................... 0 0 20,513
----------- ---------- -------
Net assets.............................................. $13,085,938 $3,069,620 $30,479
=========== ========== =======
Net assets consist of:
Contractholders' net payments...................... $ 2,500,535 $ 839,373 $ 6,589
Undistributed net investment income................ 3,278,981 672,600 9,333
Accumulated net realized gain on investments....... 2,596,195 463,135 11,141
Unrealized appreciation of investments............. 4,710,227 1,094,512 3,416
----------- ---------- -------
Net assets.............................................. $13,085,938 $3,069,620 $30,479
=========== ========== =======
Number of units outstanding*............................ 140,321 35,214 341
----------- ---------- -------
Net asset value per unit outstanding*................... $ 93.26 $ 87.17 $ 89.28
=========== ========== =======
* Units outstanding have been rounded for presentation
purposes.
</TABLE>
See notes to financial statements.
2
<PAGE> 5
KEYNOTE SERIES ACCOUNT
STATEMENTS OF OPERATIONS For the year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVA SUBACCOUNT
----------------------------------------
NON-TAX VARIABLE
TAX-QUALIFIED QUALIFIED PAYOUTS
------------- --------- --------
<S> <C> <C> <C>
Dividend income........................................... $ 24,232 $ 5,905 $ 108
Mortality and expense risk charges (Note 3)............... 128,562 30,423 0
---------- -------- -------
Net investment income (loss).............................. (104,330) (24,518) 108
---------- -------- -------
Realized and unrealized gain on investments (Note 2):
Proceeds from sales..................................... 2,209,717 526,611 77,195
Cost of shares sold..................................... 1,420,807 342,471 71,302
---------- -------- -------
Net realized gain on investments.......................... 788,910 184,140 5,893
Net increase in unrealized appreciation of investments.... 1,524,818 354,447 3,387
---------- -------- -------
Net realized and unrealized gain on investments........... 2,313,728 538,587 9,280
---------- -------- -------
Net increase in net assets resulting from operations...... $ 2,209,398 $ 514,069 $ 9,388
========== ======== =======
</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
--------------------------- ----------------------- -------------------
1996 1995 1996 1995 1996 1995
------------- ----------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income
(loss)................... $ (104,330) $ 535,275 $ (24,518) $ 128,918 $ 108 $ 3,171
Net realized gain on
investments.............. 788,910 664,322 184,140 86,812 5,893 5,074
Net increase in unrealized
appreciation of
investments.............. 1,524,818 2,252,186 354,447 539,944 3,387 313
----------- ---------- -------
Net increase in net assets
resulting from operations..... 2,209,398 3,451,783 514,069 755,674 9,388 8,558
----------- ---------- -------
FROM UNIT TRANSACTIONS:
Net proceeds from the
issuance of units........ 135,833 104,567 16,967 18,387 72,049 62,234
Net asset value of units
redeemed or used to meet
contract obligations..... (2,081,034) (2,595,434) (496,194) (224,105) (77,195) (63,801)
----------- ---------- -------
Net decrease from unit
transactions.................. (1,945,201) (2,490,867) (479,227) (205,718) (5,146) (1,567)
----------- ---------- -------
Net increase in net assets...... 264,197 960,916 34,842 549,956 4,242 6,991
Net assets beginning of year.... 12,821,741 11,860,825 3,034,778 2,484,822 26,237 19,246
----------- ---------- -------
Net assets end of year*......... $ 13,085,938 $12,821,741 $3,069,620 $3,034,778 $ 30,479 $ 26,237
=========== ========== =======
Units outstanding beginning of
year.......................... 163,054 198,896 41,289 44,577 352 344
Units issued during the year.... 1,633 1,545 215 294 926 952
Units redeemed during the
year.......................... (24,366) (37,387) (6,290) (3,582) (937) (944)
----------- ---------- -------
Units outstanding end of year... 140,321 163,054 35,214 41,289 341 352
=========== ========== =======
*Includes undistributed net
investment income of: $ 3,278,981 $ 3,383,311 $ 672,600 $ 697,118 $ 9,333 $ 9,225
</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: IVA Tax
Qualified, Non-Tax Qualified and Variable Payouts. Only the Tax Qualified and
Non-Tax Qualified are available to Individual Plans. All three sub-accounts
invest 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 18 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, 1996 consist of the following:
<TABLE>
<CAPTION>
IVA SUBACCOUNT
----------------------------------------
TAX NON-TAX VARIABLE
QUALIFIED QUALIFIED PAYOUTS
----------- ----------- --------
<S> <C> <C> <C>
Shares beginning of year:
Shares........................................... 653,837 154,756 1,338
Amount........................................... $ 9,636,332 $ 2,294,713 $ 26,208
----------- ----------- --------
Shares acquired:
Shares........................................... 6,529 805 3,524
Amount........................................... $ 135,954 $ 16,961 $ 72,049
Shares received for reinvestment of dividends:
Shares........................................... 1,164 284 5
Amount........................................... $ 24,232 $ 5,905 $ 108
Shares redeemed:
Shares........................................... (103,256) (24,889) (3,567)
Amount........................................... ($1,420,807) ($ 342,471) ($71,302)
----------- ----------- --------
Net change:
Shares........................................... (95,563) (23,800) (38)
Amount........................................... ($1,260,621) ($ 319,605) $ 855
----------- ----------- --------
Shares end of year:
Shares........................................... 558,274 130,956 1,300
Amount........................................... $ 8,375,711 $ 1,975,108 $ 27,063
=========== =========== ========
</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, 1996, 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, 1996, 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, 1996, 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 14, 1997
7
<PAGE> 10
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
The stock market has enjoyed two very strong years in a row. Everything has
gone right and expectations are high. At the same time, if slow growth
continues, earnings are at risk. In this environment a more cautious strategy
with an increased emphasis on defensive names seems appropriate. The Equity
Income Portfolio is by nature defensive to start with, increasing the less
volatile sectors can increase the downside protection.
There are several groups which could do well in both a slow growth or a
stronger economy, if that occurs. One is energy. The stocks began to strengthen
in the second half of 1996 as the oil price rose, and they finished the year
strong. Their high dividend yields, stable and predictable earnings and moderate
valuations make them defensive. In a stronger economy with increased demand for
energy, they should participate in the upturn. The international oils are an
overweight group in the Portfolio, and we have been adding to holdings of
natural gas pipelines and utilities.
The basic materials stocks also have high relative yields and low
valuations. After underperforming last year, expectations are also low. If the
U.S. or international economies should strengthen more than currently
anticipated, these very economic sensitive names would become offensive. The
capital goods stocks outperformed last year, but are not particularly extended
and could offer the same opportunity as the basic materials. Positions have been
slowly increased in aluminum, chemical, paper and forest products stocks.
The strategy is to continue to be relatively fully invested to respect the
power of the Portfolio inflows and not "fight the tape. "At the same time,
however, this strategy recognizes that the market has already had a substantial
move and may need to consolidate for awhile. Stocks with moderate valuations and
low investor expectations could enhance the Portfolio's ability to ride out any
correction.
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
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
- ------ ------- --------
<S> <C> <C>
19.76% 15.13% 13.46%
</TABLE>
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, 1996
<TABLE>
<S> <C>
ASSETS
Securities, at value (Note 2)*.................................................. $18,636,175
Cash............................................................................ 52,514
Dividends receivable............................................................ 38,254
Receivable for fund shares sold................................................. 5
Prepaid expense................................................................. 1,561
-----------
Total assets.......................................................... 18,728,509
-----------
LIABILITIES
Payable for fund shares redeemed................................................ 20,521
Payable for securities purchased................................................ 114,125
Accrued expenses:
Investment advisory fees................................................... 6,596
Custodian fees............................................................. 1,147
Professional fees.......................................................... 13,138
Miscellaneous fees......................................................... 635
-----------
Total liabilities..................................................... 156,162
-----------
Net assets...................................................................... $18,572,347
===========
Net assets consist of:
Capital stock-$.01 par value............................................... $ 7,922
Additional paid-in capital................................................. 10,948,547
Undistributed net investment income........................................ 500,290
Undistributed net realized gain on investments............................. 1,756,375
Net unrealized appreciation of investments................................. 5,359,213
-----------
Net assets...................................................................... $18,572,347
===========
Shares of capital stock outstanding............................................. 792,193
-----------
Net asset value per share of outstanding capital stock.......................... $ 23.44
===========
*Investments at cost............................................................ $13,276,962
</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, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................................... $ 39,555
Dividends................................................................... 564,718
----------
Total investment income................................................ 604,273
----------
EXPENSES:
Investment advisory fees (Note 3)........................................... 72,917
Custodian fees.............................................................. 11,203
Professional fees........................................................... 8,967
Directors fees.............................................................. 3,341
Miscellaneous fees.......................................................... 3,095
----------
Total expenses......................................................... 99,523
Expenses reduced by a custodian fee arrangement........................ (1,896)
----------
Net expenses........................................................... 97,627
----------
Net investment income............................................................ 506,646
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 2):
Realized gain from security transactions (excluding short-term securities):
Proceeds from sales.................................................... 6,869,438
Cost of securities sold................................................ 5,125,323
----------
Net realized gain on investments................................................. 1,744,115
Net increase in unrealized appreciation of investments........................... 1,057,847
----------
Net realized and unrealized gain on investments.................................. 2,801,962
----------
Net increase in net assets resulting from operations............................. $3,308,608
==========
</TABLE>
See notes to financial statements.
10
<PAGE> 13
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
From operations:
Net Investment income........................................ $ 506,646 $ 608,220
Net realized gain on investments (Note 2).................... 1,744,115 365,016
Net increase in unrealized appreciation of investments....... 1,057,847 3,968,525
----------- -----------
Net increase in net assets resulting from operations.............. 3,308,608 4,941,761
----------- -----------
Dividends and distributions to shareholders from:
Net investment income (Note 4)............................... (34,413) (567,903)
Net realized gain from investment transactions (Note 4)...... 0 (365,016)
----------- -----------
Total dividends and distributions to shareholders....... (34,413) (932,919)
----------- -----------
From share transactions:
Proceeds from the issuance of shares......................... 427,851 489,847
Proceeds from dividends reinvested........................... 34,413 932,919
Net asset value of shares redeemed........................... (3,255,147) (3,545,498)
----------- -----------
Net decrease in net assets resulting from share transactions...... (2,792,883) (2,122,732)
----------- -----------
Net increase in net assets........................................ 481,312 1,886,110
Net assets beginning of year...................................... 18,091,035 16,204,925
----------- -----------
Net assets end of year*........................................... $18,572,347 $18,091,035
=========== ===========
Shares issued and redeemed:
Issued....................................................... 20,290 26,583
Issued in reinvestment of dividends and distributions........ 1,654 47,574
Redeemed..................................................... (152,508) (195,103)
----------- -----------
Net decrease............................................ (130,564) (120,946)
=========== ===========
* Including undistributed net investment income of: $500,290 $28,990
</TABLE>
See notes to financial statements.
11
<PAGE> 14
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 97.9%
- --------------------------------------------------------------------------------
AEROSPACE/DEFENSE -- 2.2%
Northrop Grumman Corp. 2,500 $ 206,875
United Technologies Corp. 3,000 198,000
----------
404,875
----------
AUTOMOBILES -- 1.4%
Chrysler Corp. 2,000 66,000
Ford Motor Co. 2,500 79,688
General Motors Corp. 2,000 111,500
----------
257,188
----------
AUTOMOTIVE PARTS -- 1.8%
Dana Corp. 6,000 195,750
Eaton Corp. 2,000 139,500
----------
335,250
----------
BANKS/MONEY CENTERS -- 4.4%
Bank of New York Co., Inc. 4,000 135,000
BankAmerica Corp. 2,800 279,300
Bankers Trust New York Corp. 2,000 172,500
Chase Manhattan Corp. 2,500 223,125
----------
809,925
----------
BANKS/REGIONAL -- 4.6%
Banc One Corp. 4,000 172,000
First Union Corp. 3,000 222,000
NationsBank Corp. 2,000 195,500
Wells Fargo & Co. 1,000 269,750
----------
859,250
----------
CHEMICALS -- 4.1%
Dow Chemical Co. 2,000 156,750
du Pont (E.I.) de Nemours
& Co. 2,000 188,750
Monsanto Co. 7,000 272,125
Olin Corp. 4,000 150,500
----------
768,125
----------
CONGLOMERATES -- 4.5%
GATX Corp. 2,000 97,000
General Signal Corp. 4,000 171,000
Harsco Corp. 2,000 137,000
Ogden Corp. 8,000 150,000
Tenneco 2,000 90,250
Textron Inc. 2,000 188,500
----------
833,750
----------
COSMETICS -- 1.5%
Avon Products, Inc. 5,000 285,625
----------
DRUGS -- 9.4%
American Home Products Corp. 3,000 175,875
Baxter International, Inc. 3,000 123,000
Bristol Myers Squibb Co. 1,500 163,125
Lilly (Eli) & Co. 3,000 219,000
Merck and Co., Inc. 3,000 237,750
Pfizer Inc. 1,500 124,313
Schering-Plough Corp. 2,000 129,500
Smithkline Beecham P.L.C. 4,000 272,000
Warner Lambert Co. 4,000 300,000
----------
1,744,563
----------
ELECTRICAL EQUIPMENT -- 4.0%
Emerson Electric Co. 3,000 $ 290,250
General Electric Co. 4,500 444,938
----------
735,188
----------
ELECTRONICS -- 3.1%
AMP Inc. 5,000 191,875
Honeywell Inc. 3,000 197,250
Thomas & Betts Corp. 4,000 177,500
----------
566,625
----------
FOREST PRODUCTS -- 1.2%
Georgia Pacific Corp. 1,500 108,000
Weyerhaeuser Co. 2,500 118,437
----------
226,437
----------
INSURANCE -- 3.7%
Aetna Inc. 2,400 192,000
Allstate Corp. 3,000 173,625
CIGNA Corp. 1,500 204,938
Lincoln National Corp. 2,500 131,250
----------
701,813
----------
MACHINERY -- 3.3%
Cooper Industries, Inc. 3,000 126,375
Deere & Co. 5,000 203,125
Goulds Pumps, Inc. 4,000 91,748
Timken Co. 4,000 183,500
----------
604,748
----------
METALS -- 2.1%
Carpenter Technology Corp. 2,000 73,250
Freeport McMoRan Copper &
Gold, Inc. 3,000 84,375
Phelps Dodge Corp. 1,000 67,500
Reynolds Metals Co. 2,000 112,750
USX-U.S. Steel 1,500 47,063
----------
384,938
----------
MISCELLANEOUS -- 1.1%
Minnesota Mining &
Manufacturing Co. 2,500 207,188
----------
MISCELLANEOUS FINANCE -- 2.0%
American Express Co. 4,000 226,000
Federal National Mortgage
Assn. 4,000 149,000
----------
375,000
----------
NATURAL GAS DIVERSIFIED -- 3.5%
Consolidated Natural Gas Co. 3,000 165,750
El Paso Natural Gas 3,186 160,893
Questar Corp. 4,000 147,000
Sonat Inc. 3,500 180,250
----------
653,893
----------
OFFICE & BUSINESS
EQUIPMENT -- 1.9%
Pitney-Bowes, Inc. 3,500 190,750
Xerox Corp. 3,000 157,875
----------
348,625
----------
OIL -- DOMESTIC -- 1.9%
Amoco, Corp. 2,000 161,000
Atlantic Richfield Co. 1,500 198,750
----------
359,750
----------
</TABLE>
See notes to financial statements.
12
<PAGE> 15
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
OIL -- INTERNATIONAL -- 7.1%
British Petroleum 1,713 $ 242,175
Chevron, Corp. 3,000 195,000
Exxon Corp. 2,000 196,000
Mobil Corp. 1,500 183,375
Royal Dutch Petroleum Co. 1,500 256,125
Texaco, Inc. 2,500 245,313
----------
1,317,988
----------
OIL -- SERVICE &
DRILLING -- 2.3%
Dresser Industries Inc. 5,000 155,000
Williams (The) Companies, Inc. 7,500 281,250
----------
436,250
----------
PAPER -- 1.2%
International Paper Co. 2,500 100,938
Union Camp Corp. 2,500 119,375
----------
220,313
----------
PHOTOGRAPHY -- 1.3%
Eastman Kodak Co. 3,000 240,750
----------
PUBLISHING -- 1.3%
Dun & Bradstreet Corp. 2,500 59,375
McGraw-Hill Companies, Inc. 4,000 184,500
----------
243,875
----------
RAILROADS -- 2.2%
Conrail Inc. 1,148 114,370
Norfolk Southern Corp. 2,000 175,000
Union Pacific Co. 2,000 120,250
----------
409,620
----------
REAL ESTATE -- 4.9%
Avalon Properties Inc. 2,000 57,500
Bay Apartment Community, Inc. 2,000 72,000
Crescent Real Estate 1,500 79,125
Developers Diversified Realty 2,000 74,250
Equity Residential Properties
Trust 2,000 82,500
Felcor Suite Hotels Inc. 3,500 123,813
Health Care Property
Investors, Inc. 5,000 175,000
Healthcare Realty Trust 2,000 53,000
Irvine Apartment Communities,
Inc. 3,000 75,000
Meditrust 1,000 40,000
Redwood Trust Inc. 2,000 74,500
----------
906,688
----------
SAVINGS & LOAN -- 2.0%
Ahmanson (H.F.) & Co. 6,000 195,000
Great Western Financial Corp. 6,000 174,000
----------
369,000
----------
SOAPS -- 1.2%
Colgate Palmolive Co. 2,500 230,625
----------
TELECOMMUNICATIONS
EQUIPMENT -- 1.1%
Harris Corp. 3,000 205,875
----------
TOBACCO -- 2.2%
American Brands Inc. 3,500 173,688
Philip Morris Companies, Inc. 2,000 225,250
----------
398,938
----------
UTILITIES -- ELECTRIC -- 2.8%
American Electric Power Co.,
Inc. 3,000 $ 123,375
Carolina Power & Light Co. 4,000 146,000
FPL Group, Inc. 3,000 138,000
Southern Co. 5,000 113,125
----------
520,500
----------
UTILITIES -- TELEPHONE -- 6.6%
Ameritech Corp. 2,500 151,562
Bell Atlantic Corp. 2,000 129,500
Bellsouth Corp. 3,500 141,313
GTE Corp. 3,000 136,500
NYNEX Corp. 2,000 96,250
Pacific Telesis Group 5,000 183,750
SBC Communications Inc. 2,500 129,375
Sprint, Corp. 4,000 159,500
U.S. West Communications Inc. 3,000 96,745
----------
1,224,495
----------
TOTAL COMMON STOCKS
(COST $12,828,460) $ 18,187,673
<CAPTION>
PRINCIPAL AMOUNT
-------------------
<S> <C> <C>
COMMERCIAL PAPER -- 1.3%
American Express Co., 5.38%, due
01/29/97 $ 100,000 $ 99,582
General Electric Co., 5.50%, due
01/27/97 150,000 149,404
----------
TOTAL COMMERCIAL PAPER
(COST $248,986) $ 248,986
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 1.1%
Federal Home Loan Mortgage
Corp.,
5.45%, due 01/17/97
(cost $199,516) $ 200,000 $ 199,516
TOTAL INVESTMENTS
(COST $13,276,962) 100.3% $ 18,636,175
OTHER ASSETS LESS LIABILITIES -- (.3%) (63,828)
NET ASSETS 100.0% $ 18,572,347
The aggregate cost of securities for federal income tax purpose at December
31, 1996 is $13,265,982.
The following amounts are based on costs for federal income tax purposes:
Aggregate gross unrealized appreciation $ 5,446,647
Aggregate gross unrealized depreciation (76,454)
----------
Net unrealized appreciation $ 5,370,193
==========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
Percentages are based on net assets.
13
<PAGE> 16
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.
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.
Earnings credits received from the custodian are shown as a reduction of
total expenses.
14
<PAGE> 17
MONY SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
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 year ended December 31, 1996, the fee incurred by the
Equity Income Portfolio was $72,917.
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 remuneration incurred to non-affiliated Directors of the Fund for
the year ended December 31, 1996, amounted to $3,341 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
15
<PAGE> 18
MONY SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL STOCK (CONTINUED)
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 year ended December 31,
1996 were $5,114,611 and $6,869,438, respectively.
16
<PAGE> 19
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 19.61 $ 15.53 $ 16.43 $ 15.56 $ 14.64 $ 12.70
----------- ----------- ----------- ------------ ------------ ------------
Income from investment operations
Net investment income................. 0.64 0.69 0.64 0.52 0.59 0.64
Net gains (losses) on investments
(both realized and unrealized)...... 3.23 4.45 (0.51) 1.68 0.92 1.94
----------- ----------- ----------- ------------ ------------ ------------
Total from investment operations.... 3.87 5.14 0.13 2.20 1.51 2.58
Less distributions
Dividends (from net investment
income)............................. (0.04) (0.65) (0.64) (0.52) (0.59) (0.64)
Distributions (from realized capital
gains).............................. 0.00 (0.41) (0.39) (0.81) 0.00* 0.00*
----------- ----------- ----------- ------------ ------------ ------------
Total distributions................. (0.04) (1.06) (1.03) (1.33) (0.59) (0.64)
Net asset value, end of year............ $ 23.44 $ 19.61 $ 15.53 $ 16.43 $ 15.56 $ 14.64
========== ========== ========== =========== =========== ===========
Total return........................ 19.76% 33.12% 0.78% 14.14% 10.31% 20.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year................. $18,572,347 $18,091,035 $16,204,925 $151,330,311 $121,540,392 $118,114,947
Average commission rate................. $ 0.0593 N/A N/A N/A N/A N/A
Ratio of net investment income to
average net assets.................... 2.79% 3.54% 3.53% 3.22% 3.68% 4.46%
Ratio of expenses to average net
assets................................ 0.55% 0.56% 0.48% 0.46% 0.46% 0.49%
Portfolio turnover rate................. 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 year...... $ 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 year............ $ 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 year................. $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.
17
<PAGE> 20
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, 1996, 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 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, 1996, by correspondence with
the custodian and brokers. 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., as of December 31, 1996, 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 14, 1997
18
<PAGE> 21
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> 22
V
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
