<PAGE> 1
KEYNOTE SERIES ACCOUNT
---------------------------------
MUTUAL OF NEW YORK
---------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1998
<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 major investment event of the second quarter was the resurgence of
problems in Asia, this time centered on Japan. As happened last fall, the dollar
strengthened, projections for U.S. economic growth and inflation were lowered,
and U.S. interest rates fell as foreign investors sought a safe haven. Stock
investors also sought safety by moving into big cap growth stocks and
technology.
The pace of U.S. economic growth has begun to slow, the second quarter is
expected to show a marked deceleration from the fast pace of the first quarter.
The problems in Asia are beginning to affect U.S. companies as exports to the
area decline. Europe still seems okay, but the rest of the world including
Russia and South America is weakening. Japan is in a recession, and their
problems are affecting many of their neighbors. This worldwide weakness is
keeping commodity inflation low, will continue to cut U.S. economic growth
keeping interest rates stable and should keep the Federal Reserve neutral.
While this slowdown is good news for bonds, especially U.S. bonds, it has
negative implications for stocks. U.S. companies are selling less, and low
inflation limits the ability to raise prices. Employment costs have been
increasing, but in many cases, cannot be passed along. As a result, profit
margins are under pressure and earnings uncertainty is increasing. Companies
have begun guiding analysts' estimates lower; the market's punishment is severe
if earnings fall short of expectations.
While these events have been occurring, the popular averages and stock
valuations remain near record highs. While many individual stocks have corrected
10 to 15 percent or more, the averages remain near the top of a trading range
that has prevailed for several months. During this time, the averages
experienced declines of 5 to 6 percent before recovering. With uncertainties in
Asia, in the U.S. economy and in the corporate profit outlook, it does not
appear to be the time to be overly aggressive.
At the same time, there are reasons not to be overly bearish. The same
desire for safety that is driving the dollar and bonds could also spill over
into U.S. stocks. The U.S. economy and earnings are going to slow, but not
collapse, and at some point Asia will begin to recover. Finally, low interest
rates and a neutral monetary policy are positives. The market can handle
earnings uncertainties, this causes corrections. Rising interest rates and a
hostile Federal Reserve is what turns a correction into something worse.
The evidence points to a continuation of the trading range for the near
future. There is not much to push it dramatically up except and improbably quick
resolution to the Asian problems. There are a number of events that could push
the market down further -- a much worse Asia, higher compensation costs, worse
than expected earnings, but the favorable monetary and interest rate environment
puts a floor under the trading range. Mutual fund flows continue positive;
anything that changes individuals' current preference for stocks would be
negative of course. Within the range there will likely be sector rotation and on
a day to day basis reaction to economic and market news from the Far East.
Sincerely,
/s/ KENNETH M. LEVINE
Kenneth M. Levine
Chairman
1
<PAGE> 4
KEYNOTE SERIES ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVA SUBACCOUNT
---------------------------------------
NON-TAX VARIABLE
TAX QUALIFIED QUALIFIED PAYOUTS
------------- --------- --------
<S> <C> <C> <C>
ASSETS
Investments at cost (Note 4)............................ $10,313,272 $2,554,002 $21,263
=========== ========== =======
Investments in MONY Series Fund, Inc. at net asset
value (Note 2)................................... $14,452,656 $3,279,239 $20,697
Amount due from MONY............................... 0 0 27,210
----------- ---------- -------
Total assets............................................ 14,452,656 3,279,239 47,907
----------- ---------- -------
LIABILITIES
Amount due to MONY Series Fund, Inc..................... 0 0 27,210
----------- ---------- -------
Net assets.............................................. $14,452,656 $3,279,239 $20,697
=========== ========== =======
Net assets consist of:
Contractholders' net payments...................... $(1,038,853) $ (152,913) $(7,134)
Undistributed net investment income................ 6,979,977 1,527,450 14,601
Accumulated net realized gain on investments....... 4,372,148 1,179,465 13,796
Unrealized appreciation (depreciation) of
investments...................................... 4,139,384 725,237 (566)
----------- ---------- -------
Net assets.............................................. $14,452,656 $3,279,239 $20,697
=========== ========== =======
Number of units outstanding*............................ 109,654 26,618 162
----------- ---------- -------
Net asset value per unit outstanding*................... $ 131.80 $ 123.20 $128.03
=========== ========== =======
* 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 six months ended June 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IVA SUBACCOUNT
--------------------------------------
NON-TAX VARIABLE
TAX-QUALIFIED QUALIFIED PAYOUTS
------------- --------- --------
<S> <C> <C> <C>
Dividend income......................................... $ 2,330,954 $ 532,040 $ 2,904
Mortality and expense risk charges (Note 3)............. (72,787) (17,259) 0
----------- --------- --------
Net investment income................................... 2,258,167 514,781 2,904
----------- --------- --------
Realized and unrealized gain (loss) on investments
(Note 2):
Proceeds from sales................................... 1,318,873 959,714 47,952
Cost of shares sold................................... (677,490) (455,642) (48,925)
----------- --------- --------
Net realized gain (loss) on investments................. 641,383 504,072 (973)
Net decrease in unrealized appreciation of
investments........................................... (1,648,934) (705,209) (666)
----------- --------- --------
Net realized and unrealized loss on investments......... (1,007,551) (201,137) (1,639)
----------- --------- --------
Net increase in net assets resulting from operations.... $ 1,250,616 $ 313,644 $ 1,265
=========== ========= ========
</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 SIX FOR THE FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment
income............... $ 2,258,167 $ 1,442,829 $ 514,781 $ 340,069 $ 2,904 $ 2,364
Net realized gain
(loss) on
investments.......... 641,383 1,134,570 504,072 212,258 (973) 3,628
Net increase (decrease)
in unrealized
appreciation of
investments.......... (1,648,934) 1,078,091 (705,209) 335,934 (666) (3,316)
----------- ----------- ---------- ---------- -------- ------------
Net increase in net assets
resulting from
operations................ 1,250,616 3,655,490 313,644 888,261 1,265 2,676
----------- ----------- ---------- ---------- -------- ------------
FROM UNIT TRANSACTIONS:
Net proceeds from the
issuance of units.... 42,248 96,048 354,540 23,698 28,982 78,388
Net asset value of
units redeemed or
used to meet contract
obligations.......... (1,251,509) (2,426,175) (942,475) (428,049) (47,952) (73,141)
----------- ----------- ---------- ---------- -------- ------------
Net increase (decrease) from
unit transactions......... (1,209,261) (2,330,127) (587,935) (404,351) (18,970) 5,247
----------- ----------- ---------- ---------- -------- ------------
Net increase (decrease) in
net assets................ 41,355 1,325,363 (274,292) 483,911 (17,705) 7,923
Net assets beginning of
period.................... 14,411,301 13,085,938 3,553,531 3,069,620 38,402 30,479
----------- ----------- ---------- ---------- -------- ------------
Net assets end of period*... $14,452,656 $14,411,301 $3,279,239 $3,553,531 $ 20,697 $ 38,402
=========== =========== ========== ========== ======== ============
Units outstanding beginning
of period................. 118,885 140,321 31,362 35,214 328 341
Units issued during the
period.................... 281 891 40 62 233 686
Units redeemed during the
period.................... (9,512) (22,327) (4,784) (3,914) (399) (699)
----------- ----------- ---------- ---------- -------- ------------
Units outstanding end of
period.................... 109,654 118,885 26,618 31,362 162 328
=========== =========== ========== ========== ======== ============
* Includes undistributed net
investment income of: $ 6,979,977 $ 4,721,810 $1,527,450 $1,012,669 $ 14,601 $ 11,697
</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 separate account which consists of three sub-accounts, two of
which are available to Individual Plans. They all invest solely 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 7 through 16 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
Investment Valuation:
The investment in shares of the Fund is stated at the net asset value of
the 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, 1998 (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........................................... 531,782 131,126 1,417
Amount........................................... $ 8,622,983 $2,123,084 $ 38,302
----------- ---------- --------
Share acquired:
Shares........................................... 1,379 11,845 1,101
Amount........................................... $ 36,825 $ 354,520 $ 28,982
Shares received for reinvestment of dividends:
Shares........................................... 90,277 20,606 112
Amount........................................... $ 2,330,954 $ 532,040 $ 2,904
Shares redeemed:
Shares........................................... (49,236) (33,293) (1,808)
Amount........................................... $ (677,490) $ (455,642) $(48,925)
----------- ---------- --------
Net change:
Shares........................................... 42,420 (842) (595)
Amount........................................... $ 1,690,289 $ 430,918 $(17,039)
----------- ---------- --------
Shares end of period:
Shares........................................... 574,202 130,284 822
Amount........................................... $10,313,272 $2,554,002 $ 21,263
=========== ========== ========
</TABLE>
6
<PAGE> 9
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
In this environment defensive qualities and stable earnings will be
emphasized in the Portfolio's strategy. This means a continued emphasis on
utilities -- both electric and telephone, and energy -- both natural gas and
international oils. Financial stocks continue as an overweight; industry
consolidation is ongoing and earnings are still coming through. The healthcare
stocks are also emphasized both for earnings growth and predictability. They are
relatively high priced but have attractive new product flows and decent yields.
Cyclical stocks were hit very hard during the month of June as investors
moved toward growth and technology stocks. The capital spending and basic
materials sectors, as a result, look attractive on a value basis. They will,
however, need some resolution of the Asian crisis before they come back into
favor.
7
<PAGE> 10
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Securities, at value (Note 2)*.............................. $20,258,590
Cash........................................................ 95,475
Dividends receivable........................................ 36,102
Receivable for fund shares sold............................. 76
Receivable for securities sold.............................. 18
Prepaid expense............................................. 392
-----------
Total assets...................................... 20,390,653
-----------
LIABILITIES
Payable for fund shares redeemed............................ 628
Accrued expenses:
Investment advisory fees............................... 8,953
Custodian fees......................................... 4,225
Accounting fees........................................ 2,556
Professional fees...................................... 5,001
Miscellaneous fees..................................... 2,364
-----------
Total liabilities................................. 23,727
-----------
Net assets.................................................. $20,366,926
===========
Net assets consist of:
Capital stock-$.01 par value........................... $ 8,093
Additional paid-in capital............................. 10,951,338
Undistributed net investment income.................... 188,648
Undistributed net realized gain on investments......... 2,326,024
Net unrealized appreciation of investments............. 6,892,823
-----------
Net assets.................................................. $20,366,926
===========
Shares of capital stock outstanding......................... 809,323
-----------
Net asset value per share of outstanding capital stock...... $ 25.17
===========
*Investments at cost........................................ $13,365,767
</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, 1998 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................... $ 13,296
Dividends.............................................. 248,812
----------
Total investment income........................... 262,108
----------
EXPENSES:
Investment advisory fees (Note 3)...................... 52,271
Custodian fees......................................... 4,593
Accounting fees (Note 3)............................... 14,487
Professional fees...................................... 4,800
Directors fees......................................... 1,550
Miscellaneous fees..................................... 1,826
----------
Total expenses.................................... 79,527
Expenses reduced by a custodian fee arrangement... (714)
----------
Net expenses...................................... 78,813
----------
Net investment income....................................... 183,295
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 2):
Realized gain from security transactions (excluding
short-term securities):
Proceeds from sales............................... 5,552,266
Less: Cost of securities sold..................... 3,233,347
----------
Net realized gain on investments............................ 2,318,919
Net decrease in unrealized appreciation of investments...... (616,206)
----------
Net realized and unrealized gain on investments............. 1,702,713
----------
Net increase in net assets resulting from operations........ $1,886,008
==========
</TABLE>
See notes to financial statements.
9
<PAGE> 12
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 1997
---------- ------------
(UNAUDITED)
<S> <C> <C>
From operations:
Net investment income.................................. $ 183,295 $ 444,144
Net realized gain on investments (Note 2).............. 2,318,919 2,832,463
Net increase (decrease) in unrealized appreciation of
investments........................................... (616,206) 2,149,816
----------- -----------
Net increase in net assets resulting from operations........ 1,886,008 5,426,423
----------- -----------
Dividends and distributions to shareholders from:
Net investment income (Note 4)......................... (632,565) (774,467)
Net realized gain from investment transactions (Note
4).................................................... (2,642,564) (1,471,218)
----------- -----------
Total dividends and distributions to
shareholders................................... (3,275,129) (2,245,685)
----------- -----------
From share transactions:
Proceeds from the issuance of shares................... 469,645 321,172
Proceeds from dividends and distributions reinvested... 3,275,129 2,245,685
Net asset value of shares redeemed..................... (2,709,613) (3,599,056)
----------- -----------
Net increase (decrease) in net assets resulting from share
transactions.............................................. 1,035,161 (1,032,199)
----------- -----------
Net increase (decrease) in net assets....................... (353,960) 2,148,539
Net assets beginning of period.............................. 20,720,886 18,572,347
----------- -----------
Net assets end of period*................................... $20,366,926 $20,720,886
=========== ===========
Shares issued and redeemed:
Issued................................................. 16,166 12,780
Issued in reinvestment of dividends and
distributions......................................... 126,845 104,450
Redeemed............................................... (98,191) (144,920)
----------- -----------
Net increase (decrease)........................... 44,820 (27,690)
=========== ===========
* Including undistributed net investment income of: $188,648 $444,144
</TABLE>
See notes to financial statements.
10
<PAGE> 13
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 2)
- -------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 96.9%
- -------------------------------------------------------------------
AEROSPACE/DEFENSE -- 1.6%
Northrop Grumman Corp. 1,000 $ 103,125
United Technologies Corp. 2,500 231,250
-----------
334,375
-----------
AUTOMOBILES -- 2.6%
Ford Motor Co. 5,000 295,000
General Motors Corp. 3,500 233,842
-----------
528,842
-----------
AUTOMOTIVE PARTS -- 2.0%
Dana Corp. 4,000 214,000
Eaton Corp. 2,500 194,375
-----------
408,375
-----------
BANKS/MAJOR -- 3.9%
Bank of New York, Inc. 4,000 242,748
BankAmerica Corp. 2,200 190,161
Bankers Trust New York Corp. 1,200 139,274
Chase Manhattan Corp. 3,000 226,500
-----------
798,683
-----------
BANKS/REGIONAL -- 6.1%
BankBoston Corp. 5,000 278,125
First Union Corp. 3,500 203,875
Fleet Financial Group, Inc. 2,500 208,750
Mellon Bank Corp. 3,000 208,875
NationsBank Corp. 2,500 191,250
Wells Fargo & Co. 400 147,600
-----------
1,238,475
-----------
CHEMICALS -- 2.5%
duPont (E.I.) de Nemours & Co. 3,000 223,875
Olin Corp. 4,000 166,748
Rohm & Haas Co. 1,200 124,724
-----------
515,347
-----------
CONGLOMERATES -- 2.8%
General Signal Corp. 4,000 144,000
Harsco Corp. 4,000 183,248
Textron Inc. 3,500 250,904
-----------
578,152
-----------
COSMETICS -- 1.5%
Avon Products, Inc. 4,000 310,000
-----------
DRUGS -- 8.5%
American Home Products Corp. 7,000 362,250
Baxter International, Inc. 4,000 215,248
Bristol Myers Squibb Co. 2,500 287,343
Lilly (Eli) & Co. 2,000 132,124
Merck and Co., Inc. 1,200 160,500
Schering-Plough Corp. 1,300 119,113
SmithKline Beecham PLC, ADR+ 4,000 242,000
Warner Lambert Co. 3,000 208,125
-----------
1,726,703
-----------
ELECTRICAL EQUIPMENT -- 4.8%
Emerson Electric Co. 4,000 241,500
General Electric Co. 8,000 728,000
-----------
969,500
-----------
ELECTRONICS -- 2.0%
AMP, Inc. 6,000 206,250
Thomas & Betts Corp. 4,000 197,000
-----------
403,250
-----------
FINANCIAL SERVICES -- 0.7%
Morgan (JP) Co. 1,200 140,550
-----------
FOREST PRODUCTS -- 0.7%
Weyerhaeuser Co. 3,000 138,561
-----------
INSURANCE -- 3.9%
CIGNA Corp. 4,500 310,500
Lincoln National Corp. 3,000 274,125
St. Paul Cos., Inc. 5,000 210,310
-----------
794,935
-----------
MACHINERY -- 2.5%
Caterpillar Tractor Co. 3,500 185,063
Cooper Industries, Inc. 3,000 164,811
Timken Co. 5,000 154,060
-----------
503,934
-----------
METALS -- 1.7%
Carpenter Technology Corp. 3,000 150,750
Reynolds Metals Co. 1,000 55,937
USX-Marathon Group 4,000 137,248
-----------
343,935
-----------
MISCELLANEOUS -- 1.4%
Minnesota Mining &
Manufacturing Co. 2,000 164,374
Public Storage Inc. 4,000 112,000
-----------
276,374
-----------
NATURAL GAS -- 4.1%
Consolidated Natural Gas Co. 4,000 235,500
El Paso Natural Gas Co. 7,000 267,750
Enron Corp. 4,000 216,248
Questar, Corp. 6,000 117,750
-----------
837,248
-----------
OFFICE & BUSINESS EQUIP. -- 3.3%
Pitney-Bowes, Inc. 5,500 264,688
Xerox Corp. 4,000 406,500
-----------
671,188
-----------
OIL -- DOMESTIC -- 1.2%
Amoco, Corp. 2,500 104,063
Atlantic Richfield Co. 1,800 140,625
-----------
244,688
-----------
OIL -- INTERNATIONAL -- 5.0%
British Petroleum, PLC, ADR+ 1,500 132,375
Chevron Corp. 2,000 166,124
Exxon Corp. 3,000 213,936
Mobil Corp. 2,800 214,550
Royal Dutch Petroleum Co. 3,000 164,436
Texaco, Inc. 2,000 119,374
-----------
1,010,795
-----------
OIL -- SERVICES &
DRILLING -- 2.9%
Dresser Industries, Inc. 5,000 220,310
Williams (The) Companies, Inc. 11,000 371,250
-----------
591,560
-----------
</TABLE>
See notes to financial statements.
11
<PAGE> 14
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
DESCRIPTION SHARES (NOTE 2)
- -------------------------------------------------------------------
<S> <C> <C>
PAPER -- 2.0%
Georgia-Pacific Corp. 2,000 $ 117,874
International Paper Co. 3,500 150,500
Union Camp Corp. 3,000 148,875
-----------
417,249
-----------
PHOTOGRAPHY -- 0.4%
Eastman Kodak Co. 1,000 73,062
-----------
PUBLISHING -- 1.4%
McGraw-Hill Companies, Inc. 3,500 285,467
-----------
REAL ESTATE INVESTMENT
TRUSTS -- 4.9%
Avalon Bay Communities, Inc. 2,000 76,000
Crescent Real Estate Equities
Trust 4,000 134,500
Developers Diversified Realty
Corp. 2,500 97,968
Equity Office Properties Trust 4,000 113,500
Equity Residential Properties
Trust 2,000 94,874
Felcor Suite Hotels Inc. 3,500 109,813
Health Care Property
Investors, Inc. 5,000 180,310
Irvine Apartment Communities,
Inc. 3,500 101,280
Starwood Hotels 1,800 86,962
-----------
995,207
-----------
RETAIL SERVICES -- 2.3%
Penney (J.C.) & Co., Inc. 3,000 216,936
Sears Roebuck & Co. 4,000 244,248
-----------
461,184
-----------
SAVINGS & LOAN -- 2.1%
Ahmanson (H.F.) & Co. 3,000 213,000
Washington Mutual Inc. 5,000 217,185
-----------
430,185
-----------
SOAPS -- 0.9%
Colgate-Palmolive Co. 2,000 176,000
-----------
TELECOMMUNICATIONS EQUIPMENT -- 1.1%
Harris Corp. 5,000 223,435
-----------
TOBACCO -- 1.5%
Fortune Brands, Inc. 4,000 153,748
Philip Morris Companies, Inc. 4,000 157,500
-----------
311,248
-----------
U.S. GOVERNMENT AGENCY -- 0.9%
Federal National Mortgage
Assn. 3,000 182,250
-----------
UTILITIES -- ELECTRIC -- 4.8%
American Electric Power, Inc. 3,000 136,125
CMS Energy Corp. 3,000 132,000
Carolina Power & Light Co. 4,000 173,500
Duke Energy Corp. 3,000 177,750
Edison International 6,000 177,372
FPL Group, Inc. 3,000 189,000
-----------
985,747
-----------
UTILITIES -- TELEPHONE -- 8.9%
AT&T Corp. 4,000 $ 228,500
Ameritech Corp. 4,500 201,936
Bell Atlantic Corp. 4,000 182,500
Bellsouth Corp. 3,000 201,374
Frontier Corporation 6,000 189,000
GTE Corp. 4,000 222,500
SBC Communications Inc. 5,000 200,000
Sprint Corp. 3,000 211,500
U.S. West Communications Inc. 4,000 188,000
-----------
1,825,310
-----------
TOTAL COMMON STOCKS
(COST $12,837,744) $19,731,814
- -------------------------------------------------------------------
PREFERRED STOCK -- 0.4%
- -------------------------------------------------------------------
Aetna Inc., 6.25%, Class C
(COST $76,372) 1,000 $ 75,125
- -------------------------------------------------------------------
PRINCIPAL AMOUNT
----------------
COMMERCIAL PAPER -- 0.8%
- -------------------------------------------------------------------
American Express Credit Corp.,
5.52%, due 07/30/98
(COST $174,222) $175,000 $ 174,222
- -------------------------------------------------------------------
U.S. TREASURY OBLIGATION -- 1.4%
- -------------------------------------------------------------------
U.S. Treasury Note,
5.42%, due 07/30/98
(COST $277,429) $280,000 $ 277,429
- -------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $13,365,767) -- 99.5% $20,258,590
OTHER ASSETS LESS LIABILITIES -- 0.5% 108,336
- -------------------------------------------------------------------
NET ASSETS -- 100.0% $20,366,926
===================================================================
</TABLE>
The aggregate cost of securities for federal income tax purposes at June 30,
1998 is $13,353,308.
The following amounts are based on costs for federal income tax purposes:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation $ 7,108,469
Aggregate gross unrealized depreciation (203,187)
-----------
Net unrealized appreciation $ 6,905,282
===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
+ ADR = American Depository Receipts.
Percentages are based on net assets.
12
<PAGE> 15
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
The Equity Income Portfolio (the "Portfolio") is one of the portfolios
offered within the MONY Series Fund, Inc. (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 Portfolio, including any restricted
securities, are valued at their fair value as determined in good faith by the
Board of Directors. As of June 30, 1998, there were no such securities.
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.
13
<PAGE> 16
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
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 the Portfolio, administers the overall day-to-day affairs of the Portfolio,
bears all expenses associated with organizing the Fund, the initial registration
of its securities, and the compensation of the directors, officers and employees
of the Portfolio who are affiliated with the Investment Adviser.
For these services, the Investment Adviser receives an investment advisory
fee. The fee is a daily charge equal to an annual rate of .50% of the first
$400,000,000 of the average daily net assets of the Portfolio; .35% of the next
$400,000,000 of the average daily net assets of the Portfolio; and .30% of the
average daily net assets of the Portfolio in excess of $800,000,000. Prior to
October 14, 1997, the fee for the first $400,000,000 was .40% of the aggregate
average daily net assets for all of the Fund's Portfolios. For the six months
ended June 30, 1998, the fees incurred by the Equity Income Portfolio was
$52,271. On October 15, 1997, the Investment Adviser began assessing the Fund an
accounting fee. This fee is based on an allocation of expenses borne by the
Investment Adviser for personnel, facilities and services necessary to calculate
the Portfolios' daily net asset values. The fee is allocated to the Portfolios
at $25,000 per portfolio, per annum, with the excess of the Investment Adviser's
expenses allocated to each Portfolio daily based on each Portfolio's net assets
in relation to the total net assets of the Fund.
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. MONY also provides transfer agent services to the Portfolio.
The Investment Adviser pays MONY for these services.
Aggregate renumeration incurred to non-affiliated Directors of the Fund for
the six months ended June 30, 1998, amounted to $1,550 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, 1997, the Equity Income Portfolio
increased undistributed realized gains by $5,354 and decreased undistributed net
investment income by $5,354. Those differences are primarily due to return of
capital distribution received on investments.
5. CAPITAL STOCK
A. Authorized Capital Stock:
The Equity Income Portfolio has 150 million authorized shares of capital
stock with a par value of $.01 per share.
14
<PAGE> 17
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. CAPITAL STOCK (CONTINUED)
B. Purchases of Portfolio Shares:
Shares of the Portfolio 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 the Keynote Series Account ("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,
1998 were $3,075,566 and $5,552,213, respectively.
15
<PAGE> 18
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, --------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------------ ----------- ----------- ----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 27.10 $ 23.44 $ 19.61 $ 15.53 $ 16.43 $ 15.56
----------- ----------- ----------- ----------- ----------- ------------
Income from investment operations
Net investment income............... 0.53 0.61 0.98 0.69 0.64 0.52
Net gains (losses) on investments
(both realized and unrealized).... 2.09 5.96 2.89 4.45 (0.51) 1.68
----------- ----------- ----------- ----------- ----------- ------------
Total from investment
operations...................... 2.62 6.57 3.87 5.14 0.13 2.20
----------- ----------- ----------- ----------- ----------- ------------
Less distributions
Dividends (from net investment
income)........................... (0.88) (1.00) (0.04) (0.65) (0.64) (0.52)
Distributions (from realized capital
gains)............................ (3.67) (1.91) 0.00 (0.41) (0.39) (0.81)
----------- ----------- ----------- ----------- ----------- ------------
Total distributions............... (4.55) (2.91) (0.04) (1.06) (1.03) (1.33)
----------- ----------- ----------- ----------- ----------- ------------
Net asset value, end of period........ $ 25.17 $ 27.10 $ 23.44 $ 19.61 $ 15.53 $ 16.43
=========== =========== =========== =========== =========== ============
Total return...................... 13.19% 31.26% 19.76% 33.12% 0.78% 14.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period............. $20,366,926 $20,720,886 $18,572,347 $18,091,035 $16,204,925 $151,330,311
Average commission rate............... $ 0.0586 $ 0.0491 $ 0.0593 N/A N/A N/A
Ratio of net investment income to
average net assets.................. 1.76%+ 2.20% 2.79% 3.54% 3.53% 3.22%
Ratio of expenses to average net
assets.............................. 0.77%+ 0.59% 0.55% 0.56% 0.48% 0.46%
Portfolio turnover rate............... 15.08% 29.32% 29.37% 26.80% 32.48% 28.48%
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------
1992 1991 1990 1989
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.............................. $ 14.64 $ 12.70 $ 14.26 $ 12.67
------------ ------------ ----------- ----------
Income from investment operations
Net investment income............... 0.59 0.64 0.54 0.64
Net gains (losses) on investments
(both realized and unrealized).... 0.92 1.94 (1.50) 2.20
------------ ------------ ----------- ----------
Total from investment
operations...................... 1.51 2.58 (0.96) 2.84
------------ ------------ ----------- ----------
Less distributions
Dividends (from net investment
income)........................... (0.59) (0.64) (0.60) (0.64)
Distributions (from realized capital
gains)............................ 0.00* 0.00* 0.00 (0.61)
------------ ------------ ----------- ----------
Total distributions............... (0.59) (0.64) (0.60) (1.25)
------------ ------------ ----------- ----------
Net asset value, end of period........ $ 15.56 $ 14.64 $ 12.70 $ 14.26
============ ============ =========== ==========
Total return...................... 10.31% 20.31% (6.73%) 22.42%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period............. $121,540,392 $118,114,947 $99,878,151 $6,185,876
Average commission rate............... N/A N/A N/A N/A
Ratio of net investment income to
average net assets.................. 3.68% 4.46% 5.39% 4.66%
Ratio of expenses to average net
assets.............................. 0.46% 0.49% 0.52% 0.88%
Portfolio turnover rate............... 35.62% 25.84% 8.89% 19.55%
</TABLE>
- ---------------
* Less than $.01 per share.
+ Annualized
16
<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
PricewaterhouseCoopers L.L.P.
1301 Avenue of the Americas
New York, New York 10019
</TABLE>
<PAGE> 20
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
