<PAGE> 1
*
---------------------------------
KEYNOTE
SERIES
ACCOUNT
---------------------------------
---------------------------------
MONY LIFE INSURANCE COMPANY
---------------------------------
ANNUAL REPORT
DECEMBER 31, 1999
<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 U.S. economy continues to roll along with little visible evidence of
any slowdown. The stock market, propelled by the "new economy" model of strong
growth, low inflation, budget surpluses, rising technology-driven productivity
and increasing earnings, continues to move higher. The strong market improves
consumer confidence, which encourages spending, which fuels the economy, which
raises earnings which keeps the market rising. This self-reinforcing virtuous
cycle has led to the longest economic expansion, and the strongest bull market
in modern history.
Now for the first time there are some serious clouds, in the form of rising
interest rates, on the investment horizon. The economy is simply too strong;
there is a continuation of recent year's US growth, accompanied by recovery in
Asia, and Europe. It seems more and more likely that the Federal Reserve will
decide to raise interest rates to attempt to cool off the economy and the stock
market. Last years increases rescinded the prior year's crisis related cuts.
This years increases will be real tightening and should give the stock market a
reason to experience a meaningful correction.
Market fundamentals continue to be good; earnings are still growing,
inflation is moderate, although long-term rates have already risen. The problem
is the record high valuation of these very good conditions, especially in the
technology and internet related sectors. If The Fed does tighten as expected the
market should react on the downside. A significant correction is expected but
not a major bear market as long the fundamental backdrop continues positive.
Some market weakness would correct the overvaluation and help cool the
economy. The tightening should start early in the year, be serious enough to get
the Fed's message across, and hopefully slow growth without inducing a
recession. First tuning is always difficult, especially with the leads and lags
involved, and uncertainty is likely to rise as the process unfolds. Anything can
happen once rates start to rise but an early start and a gradualist approach
should help keep things manageable.
Sincerely,
/s/ KENNETH LEVINE
Chairman
1
<PAGE> 4
KEYNOTE SERIES ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
IVA SUBACCOUNT
---------------------------------------
NON-TAX VARIABLE
TAX QUALIFIED QUALIFIED PAYOUTS
------------- --------- --------
<S> <C> <C> <C>
ASSETS
Shares held in Equity Income Portfolio of
MONY Series Fund, Inc................................ 562,463 129,257 5,246
=========== ========== ========
Investments at cost............................... $11,439,528 $2,790,550 $130,726
=========== ========== ========
Investments at net asset value.................... $13,172,872 $3,027,192 $122,873
----------- ---------- --------
Total assets........................................... 13,172,872 3,027,192 122,873
----------- ---------- --------
LIABILITIES
Amount due to MONY..................................... 5,685 1,317 0
----------- ---------- --------
Total liabilities...................................... 5,685 1,317 0
----------- ---------- --------
Net assets............................................. $13,167,187 $3,025,875 $122,873
=========== ========== ========
Net assets consist of:
Contractholders' net payments..................... $(3,580,490) $ (694,798) $ 90,720
Undistributed net investment income............... 9,254,732 2,043,517 24,625
Accumulated net realized gain on investments...... 5,759,601 1,440,514 15,381
Net unrealized appreciation (depreciation) of
investments..................................... 1,733,344 236,642 (7,853)
----------- ---------- --------
Net assets............................................. $13,167,187 $3,025,875 $122,873
=========== ========== ========
Number of units outstanding*........................... 91,045 22,384 862
----------- ---------- --------
Net asset value per unit outstanding*.................. $ 144.62 $ 135.18 $ 142.54
=========== ========== ========
* Units outstanding have been rounded for presentation purposes.
</TABLE>
See notes to financial statements.
2
<PAGE> 5
KEYNOTE SERIES ACCOUNT
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
IVA SUBACCOUNT
--------------------------------------
NON-TAX VARIABLE
TAX-QUALIFIED QUALIFIED PAYOUTS
------------- --------- --------
<S> <C> <C> <C>
Dividend and net investment income....................... $ 2,484,126 $ 563,920 $ 10,024
Mortality and expense risk charges....................... (141,635) (32,277) 0
----------- --------- --------
Net investment income.................................... 2,342,491 531,643 10,024
----------- --------- --------
Realized and unrealized gain (loss) on investments:
Net realized gain on investments....................... 888,839 211,037 1,185
Net change in unrealized (depreciation) of
investments......................................... (2,274,316) (530,275) (10,109)
----------- --------- --------
Net realized and unrealized (loss) on investments........ (1,385,477) (319,238) (8,924)
----------- --------- --------
Net increase in net assets resulting from operations..... $ 957,014 $ 212,405 $ 1,100
=========== ========= ========
</TABLE>
See notes to financial statements.
3
<PAGE> 6
KEYNOTE SERIES ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
IVA SUBACCOUNT
--------------------------------------------------------------------------
NON-TAX VARIABLE
TAX-QUALIFIED QUALIFIED PAYOUTS
------------------------- ----------------------- --------------------
1999 1998 1999 1998 1999 1998
----------- ----------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income........ $ 2,342,491 $ 2,190,431 $ 531,643 $ 499,205 $ 10,024 $ 2,904
Net realized gain (loss) on
investments................ 888,839 1,139,997 211,037 554,084 1,185 (573)
Net change in unrealized
appreciation (depreciation)
of investments............. (2,274,316) (1,780,657) (530,275) (663,529) (10,109) 2,156
----------- ----------- ---------- ---------- -------- ---------
Net increase in net assets
resulting from operations....... 957,014 1,549,771 212,405 389,760 1,100 4,487
----------- ----------- ---------- ---------- -------- ---------
FROM UNIT TRANSACTIONS:
Net proceeds from the
issuance of units.......... 156,282 248,720 9,255 14,437 103,818 107,936
Net asset value of units
redeemed or used to meet
contract obligations....... (1,813,869) (2,342,032) (464,746) (688,766) (15,652) (117,218)
----------- ----------- ---------- ---------- -------- ---------
Net increase (decrease) from unit
transactions.................... (1,657,587) (2,093,312) (455,491) (674,329) 88,166 (9,282)
----------- ----------- ---------- ---------- -------- ---------
Net increase (decrease) in net
assets.......................... (700,573) (543,541) (243,086) (284,569) 89,266 (4,795)
Net assets beginning of year...... 13,867,760 14,411,301 3,268,961 3,553,530 33,607 38,402
----------- ----------- ---------- ---------- -------- ---------
Net assets end of year*........... $13,167,187 $13,867,760 $3,025,875 $3,268,961 $122,873 $ 33,607
=========== =========== ========== ========== ======== =========
UNIT TRANSACTIONS:
Units outstanding beginning of
year............................ 102,567 118,885 25,866 31,362 255 328
Units issued during the year...... 584 1,838 70 89 719 883
Units redeemed during the year.... (12,106) (18,156) (3,552) (5,585) (112) (956)
----------- ----------- ---------- ---------- -------- ---------
Units outstanding end of year..... 91,045 102,567 22,384 25,866 862 255
=========== =========== ========== ========== ======== =========
*Includes undistributed net
investment income of: $ 9,254,732 $ 6,912,241 $2,043,517 $1,511,874 $ 24,625 $ 14,601
=========== =========== ========== ========== ======== =========
</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 MONY Life Insurance Company ("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
owner of the assets in Keynote. This report contains information related to
Individual Plans only.
There is one separate account which consists of three subaccounts, 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 and is affiliated with MONY.
The financial statements and footnotes of the Portfolio are contained on
pages hereinafter of this report and should be read in conjunction with these
financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
Investments:
The investment in shares of the Portfolio is stated at value which is the
net asset value reported by the Portfolio. The Portfolio's net asset value is
based upon market or fair valuations of the securities held in the Portfolio.
Investment Transactions and Investment Income:
Investments in the Portfolio are recorded on the trade date. Realized gains
and losses include gains and losses on redemption of investments in the
Portfolio determined on the identified cost basis. Dividend income is recorded
on ex-dividend date. Dividend income includes distributions of net investment
income and net realized gains received from the Portfolio. Dividend income
received is reinvested in additional shares of the Portfolio.
Taxes:
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.
3. RELATED PARTY TRANSACTIONS
Because Keynote purchases shares of the Portfolio, the net assets of
Keynote reflect the Portfolio's 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 to the Portfolio.
Daily charges against Keynote for mortality and expense risks assumed by
MONY are computed at an annual rate of 1.0% of the average daily net assets of
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. INVESTMENT TRANSACTIONS:
Cost of shares acquired and proceeds from shares redeemed during the year
ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS FROM
IVA SUBACCOUNTS SHARES ACQUIRED SHARES REDEEMED
--------------- --------------- ---------------
<S> <C> <C>
MONY Series Fund, Inc. -- Equity Income Portfolio:
Tax Qualified............................................. $157,029 $1,950,688
Non-tax Qualified......................................... 9,152 495,723
Variable Payouts.......................................... 103,820 15,654
</TABLE>
6
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MONY Life Insurance Company and the
Contractholders of Keynote Series Account:
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of the IVA Tax Qualified, IVA
Non-tax Qualified, and IVA Variable Payouts Subaccounts of the Keynote Series
Account at December 31, 1999, the results of each of their operations for the
year then ended and the changes in each of their net assets for each of the two
years in the period then ended, in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of MONY Life Insurance Company's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1999 by correspondence with the fund transfer agent, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 11, 2000
7
<PAGE> 10
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
The major part of the overvaluation and over enthusiasm in the market is in
the technology sector. This was the only game in town for the fourth quarter and
for much of the year. Investors saw these companies as being able to prosper and
grow, even in the no pricing power environment that existed for the rest of the
economy. The Equity Income Portfolio cannot own most of these technology stocks
because they have little or no dividend yield, and as a result the fund lagged
the popular averages which are heavily influenced by the tech sector.
The average company had more modest returns than the averages, many
industries and stocks were flat to down for the year and many experienced bear
market size declines. The stock market is very richly valued at current levels
but the market risk is concentrated in a relatively small number of very big
companies. The rest of the market is more reasonably priced, and while these
stocks will also sell off in a market decline, they are not as extended as the
recent leaders.
The Equity Income Portfolio's strategy is emphasizing these neglected parts
of the market. Strong growth should favor the energy and basic materials sector,
both should have above average earnings gains this year. The same is true of the
machinery and capital spending related industries. The drug stocks
underperformed in 1999 as growth investors moved toward the tech stocks. They
and the telecommunications sectors should do better this year. These stocks all
have reasonable valuations of rising earnings, above average yields and they
have already experienced significant declines. They will also benefit from any
broadening of the market or increase in defensiveness by investors.
GROWTH OF A $10,000 INVESTMENT
[GRAPHIC]
<TABLE>
<CAPTION>
MONY EQUITY INCOME S & P 500
------------------ ---------
<S> <C> <C>
12/31/89 10000.00 10000.00
12/31/90 9325.27 9689.48
12/31/91 11220.80 12641.70
12/31/92 12374.60 13604.70
12/31/93 14124.70 14976.00
12/31/94 14235.30 15173.80
12/31/95 18950.30 20876.60
12/31/96 22694.50 25668.90
12/31/97 29788.30 34232.80
12/31/98 33552.00 44012.30
12/31/99 36250.50 53269.30
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
- ------ ------- --------
<S> <C> <C>
8.04% 20.56% 13.75%
</TABLE>
MONY Series Fund performance numbers assume dividend reinvestment and
include all fees. Past performance is no guarantee of future results. The
investment returns and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
* The S&P 500 is an unmanaged index that includes the common stocks of 500
companies that tend to be leaders in important industries within the U.S.
economy. It assumes the reinvestment of dividends and distributions and does not
include any management fees or expenses. One cannot invest in an index.
8
<PAGE> 11
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
COMMON STOCKS -- 98.38%
- --------------------------------------------------------------------
AEROSPACE -- 3.68%
Honeywell International Inc. 4,000 $ 230,750
Northrop Grumman Corporation 3,500 189,219
United Technologies Corporation 4,000 260,000
-----------
679,969
-----------
AUTOMOTIVE -- 2.34%
Ford Motor Company 4,000 213,750
General Motors Corporation 3,000 218,062
-----------
431,812
-----------
BANKING -- 5.46%
Bank of America Corporation 2,800 140,525
Bank of New York Company Inc. 5,200 208,000
Chase Manhattan Corporation 2,500 194,219
FleetBoston Financial Corporation 5,000 174,062
J. P. Morgan & Company Inc. 700 88,638
Wells Fargo & Company 5,000 202,187
-----------
1,007,631
-----------
CHEMICALS -- 3.61%
Dow Chemical Company 2,200 293,975
Du Pont (E.I.) de Nemours &
Company 3,500 230,563
Rohm & Haas Company 3,500 142,406
-----------
666,944
-----------
COMPUTER HARDWARE -- 0.86%
Xerox Corporation 7,000 158,813
-----------
CONGLOMERATES -- 2.21%
Minnesota Mining & Manufacturing
Company 2,200 215,325
Textron Inc. 2,500 191,719
-----------
407,044
-----------
CONSUMER DURABLES -- 0.81%
Dana Corporation 5,000 149,688
-----------
CONSUMER NON-DURABLES -- 1.25%
Avon Products Inc. 7,000 231,000
-----------
CONSUMER PRODUCTS -- 3.48%
Colgate-Palmolive Company 4,000 260,000
Kimberly-Clark Corporation 2,500 163,125
Procter & Gamble Company 2,000 219,125
-----------
642,250
-----------
CRUDE & PETROLEUM -- 6.40%
BP Amoco (ADR) 3,800 225,388
Chevron Corporation 2,000 173,250
Exxon Mobil Corporation 6,000 483,375
Royal Dutch Petroleum Company
(ADR) 2,700 163,181
Texaco Inc. 2,500 135,781
-----------
1,180,975
-----------
ELECTRICAL EQUIPMENT -- 5.85%
Emerson Electric Company 4,000 229,500
General Electric Company 5,500 851,125
-----------
1,080,625
-----------
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
ENERGY -- 6.38%
Atlantic Richfield Company 2,000 $ 173,000
Consolidated Natural Gas Company 2,000 129,875
Duke Energy Corporation 4,500 225,563
El Paso Energy Corporation 4,500 174,656
Enron Corporation 4,500 199,688
Williams Companies Inc. 9,000 275,062
-----------
1,177,844
-----------
FOOD & BEVERAGES & TOBACCO -- 0.25%
Philip Morris Companies Inc. 2,000 46,375
-----------
INSURANCE -- 1.75%
Cigna Corporation 4,000 322,250
-----------
MACHINERY -- 3.58%
Caterpillar Inc. 4,300 202,369
Deere & Company 5,000 216,875
Pitney Bowes Inc. 5,000 241,562
-----------
660,806
-----------
MANUFACTURING -- 0.98%
Eaton Corporation 2,500 181,562
-----------
METALS & MINING -- 1.48%
Alcoa Inc. 3,300 273,900
-----------
MISC. FINANCIAL SERVICES -- 1.90%
Citigroup Inc. 6,300 350,044
-----------
MULTI-LINE INSURANCE -- 0.87%
Lincoln National Corporation 4,000 160,000
-----------
OIL SERVICES -- 4.94%
Baker Hughes Inc. 5,500 115,844
Diamond Offshore Drilling Inc. 5,000 152,812
Halliburton Company 4,000 161,000
Kerr-McGee Corporation 3,200 198,400
Schlumberger Ltd. 2,500 140,625
Tidewater Inc. 3,500 126,000
Transocean Sedco Forex Inc. 484 16,305
-----------
910,986
-----------
PROPERTY-CASUALTY INSURANCE -- 1.37%
Chubb Corporation 4,500 253,406
-----------
PAPER & FOREST PRODUCTS -- 6.17%
Bowater Inc. 4,000 217,250
Georgia-Pacific Group 6,000 304,500
International Paper Company 6,500 366,844
Temple-Inland Inc. 3,800 250,562
-----------
1,139,156
-----------
PHARMACEUTICALS -- 12.23%
Abbott Laboratories 4,500 163,406
American Home Products Corporation 6,000 236,625
Baxter International Inc. 4,000 251,250
Bristol-Myers Squibb Company 4,400 282,425
Eli Lilly & Company 2,800 186,200
Johnson & Johnson 2,500 232,813
Merck & Company Inc. 3,700 248,131
Pharmacia & Upjohn Inc. 4,500 202,500
Smithkline Beecham (ADR) 4,000 257,750
Warner-Lambert Company 2,400 196,650
-----------
2,257,750
-----------
PRINTING & PUBLISHING -- 1.17%
McGraw-Hill Companies Inc. 3,500 215,687
-----------
</TABLE>
See notes to financial statements.
9
<PAGE> 12
MONY SERIES FUND, INC.
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
RAW MATERIALS -- 2.38%
Phelps Dodge Corporation 2,800 $ 187,950
Weyerhaeuser Company 3,500 251,344
-----------
439,294
-----------
REAL ESTATE -- 2.18%
Boston Properties Inc. 3,000 93,375
Crescent Real Estate Equities
Company 5,000 91,875
Equity Office Properties Trust 4,500 110,812
Equity Residential Properties
Trust 2,500 106,719
-----------
402,781
-----------
TELECOMMUNICATIONS -- 12.88%
AT&T Corporation 6,300 319,725
Bell Atlantic Corporation 4,800 295,500
BellSouth Corporation 6,000 280,875
Global Crossing Ltd. (a) 6,500 325,000
GTE Corporation 4,000 282,250
SBC Communications Inc. 6,500 316,875
Sprint Corporation 4,000 269,250
US West Inc. 4,000 288,000
-----------
2,377,475
-----------
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION SHARES VALUE
<S> <C> <C>
UTILITIES -- 1.92%
CMS Energy Corporation 5,500 $ 171,531
Edison International 7,000 183,313
-----------
354,844
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $12,891,016) $18,160,911
- --------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C> <C>
COMMERCIAL PAPER -- 1.57%
- --------------------------------------------------------------------
Conagra Inc. 7.00% due 01/12/00 $290,000 $ 289,380
- --------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $289,380) $ 289,380
- --------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $13,180,396) $18,450,291
OTHER ASSETS LESS LIABILITIES -- 0.05% 9,467
- --------------------------------------------------------------------
NET ASSETS -- 100% $18,459,758
====================================================================
</TABLE>
(a) Non-income producing security.
ADR = American Depository Receipt.
See notes to financial statements.
10
<PAGE> 13
MONY SERIES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
EQUITY INCOME
PORTFOLIO
-------------
<S> <C>
ASSETS:
Investments at value........................................ $18,450,291
Receivable for fund shares sold............................. 640
Receivable for investments sold............................. --
Dividends and interest receivable........................... 27,241
Cash and other assets....................................... 810
-----------
Total assets...................................... 18,478,982
-----------
LIABILITIES:
Payable for fund shares redeemed............................ 10
Investment advisory fees payable............................ 7,789
Administration fees payable................................. 1,161
Accrued expenses and other liabilities...................... 10,264
-----------
Total liabilities................................. 19,224
-----------
NET ASSETS................................... $18,459,758
===========
NET ASSETS:
Paid-in capital............................................. $10,431,460
Undistributed (accumulated) net investment income (loss).... 297,278
Undistributed (accumulated) net realized gain (loss) on
investments............................................... 2,461,125
Unrealized appreciation (depreciation) on investments....... 5,269,895
-----------
NET ASSETS................................... $18,459,758
===========
Fund shares outstanding..................................... 788,254
-----------
Net asset value per share................................... $23.42
===========
INVESTMENTS AT COST......................................... $13,180,396
</TABLE>
See notes to financial statements.
11
<PAGE> 14
MONY SERIES FUND, INC
STATEMENT OF OPERATIONS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
EQUITY INCOME
PORTFOLIO
-------------
<S> <C>
INVESTMENT INCOME:
Interest............................................... $ 13,864
Dividends.............................................. 428,398
-----------
Total investment income........................... 442,262
-----------
EXPENSES:
Investment advisory fees............................... 98,594
Custodian fees......................................... 11,082
Accounting fees........................................ 24,591
Administration fees.................................... 1,161
Directors' fees and expenses........................... 1,397
Audit and legal fees................................... 782
-----------
Total expenses.................................... 137,607
-----------
Less: Expenses reduced by a custodian fee
arrangement......................................... (1,145)
-----------
Total expenses, net of expense reduction............. 136,462
-----------
NET INVESTMENT INCOME (LOSS).................... 305,800
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on security transactions...... 2,439,376
Net change in unrealized gain (loss) on investments.... (1,208,862)
-----------
Net realized and unrealized gain (loss) on
investments...................................... 1,230,514
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. $ 1,536,314
===========
</TABLE>
See notes to financial statements.
12
<PAGE> 15
MONY SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
EQUITY INCOME PORTFOLIO
-------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ 305,800 $ 375,239
Net realized gain (loss) on investments................... 2,439,376 3,086,639
Net change in unrealized gain (loss) on investments....... (1,208,862) (1,030,272)
----------- -----------
Increase (decrease) in net assets resulting from
operations............................................. 1,536,314 2,431,606
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................... (365,229) (632,565)
Net realized gains on investments......................... (3,095,880) (2,642,564)
----------- -----------
Total distributions to shareholders.................. (3,461,109) (3,275,129)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS:
Shares sold............................................... 517,508 796,187
Reinvestment of distributions............................. 3,461,109 3,275,129
Shares redeemed........................................... (3,395,551) (4,147,192)
----------- -----------
Total increase (decrease) in net assets resulting
from capital share transactions................... 583,066 (75,876)
----------- -----------
Total increase (decrease) in net assets.............. (1,341,729) (919,399)
NET ASSETS:
Beginning of period....................................... 19,801,487 20,720,886
----------- -----------
End of period............................................. $18,459,758 $19,801,487
=========== ===========
SHARES ISSUES AND REDEEMED:
Issued.................................................... 22,131 29,633
Issued in reinvestment of distributions................... 141,965 126,845
Redeemed.................................................. (138,809) (158,014)
----------- -----------
Net increase (decrease)........................... 25,287 (1,536)
=========== ===========
</TABLE>
See notes to financial statements.
13
<PAGE> 16
MONY SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY INCOME PORTFOLIO
-----------------------------------------------------------
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 25.95 $ 27.10 $ 23.44 $ 19.61 $ 15.53
------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss)...................... 0.38(c) 0.78 0.61 0.98 0.69
Net realized and unrealized gain (loss) on
investments..................................... 1.90 2.62 5.96 2.89 4.45
------- ------- ------- ------- -------
Total from investment operations.................. 2.28 3.40 6.57 3.87 5.14
------- ------- ------- ------- -------
Dividends from net investment income.............. (0.51) (0.88) (1.00) (0.04) (0.65)
Distributions from net capital gains.............. (4.30) (3.67) (1.91) -- (0.41)
------- ------- ------- ------- -------
Total distributions............................... (4.81) (4.55) (2.91) (0.04) (1.06)
------- ------- ------- ------- -------
Net asset value, end of period.................... $ 23.42 $ 25.95 $ 27.10 $ 23.44 $ 19.61
======= ======= ======= ======= =======
Total return...................................... 8.04% 12.63% 31.26% 19.76% 33.12%
Net assets, end of period (000)................... $18,460 $19,801 $20,721 $18,572 $18,091
Ratio of expenses (excluding expense reduction) to
average net assets.............................. 0.70% 0.76% 0.59% 0.55% 0.56%
Ratio of expenses to average net assets........... 0.70% 0.75% 0.58% 0.54% 0.55%
Ratio of net investment income (loss) (excluding
expense reduction) to average net assets........ 1.56% 1.86% 2.20% 2.78% 3.54%
Ratio of net investment income (loss) to average
net assets...................................... 1.57% 1.88% 2.20% 2.79% 3.54%
Portfolio turnover................................ 27% 28% 29% 29% 27%
</TABLE>
- ---------------
(c) Based on average shares outstanding.
See notes to financial statements.
14
<PAGE> 17
MONY SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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 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").
The Portfolio is currently offered only to separate accounts of certain
insurance companies as an investment medium for both variable annuity contracts
and variable life insurance policies. The following is a summary of significant
accounting policies consistently followed by the Portfolio in preparation of its
financial statements.
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, which approximates market. 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.
Bonds are valued at the last price provided by an independent pricing
service for securities traded on a national securities exchange. Bonds that are
listed on a national securities exchange but are not traded and bonds that are
regularly traded in the over-the-counter market are valued at the mean of the
last available bid and asked prices provided by an independent pricing service.
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 December 31, 1999, there were no such securities.
B. Federal Income Taxes:
No provision for Federal income or excise taxes is required because the
Portfolio intends to continue to qualify as a regulated investment company and
distribute all of its taxable income to shareholders.
C. Security Transactions and Investment Income:
Security transactions are accounted for on the trade date. Realized gains
and losses from security transactions are determined on the basis of identified
cost for accounting and Federal income tax purposes. Dividend income received
and distributions paid to shareholders are recognized on the ex-dividend date,
and interest income is recognized on the accrual basis. Premiums and discounts
are amortized daily for both financial and tax purposes.
15
<PAGE> 18
MONY SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Expenses:
Each Portfolio of the Fund bears expenses incurred specifically on its
behalf, such as advisory and custodian fees, as well as a portion of the common
expenses of the Fund which are generally allocated based on average net assets.
E. Dividends and Distributions:
Dividends from net investment income and net realized capital gains 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 accounting principles generally accepted in
the United States.
F. Use of Estimates in Preparation of Financial Statements:
Preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that may 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 those 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 MONY Life Insurance Company ("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 organizing the Fund, the initial registration
of its securities, and the compensation of the directors, officers and employees
of the Fund who are affiliated with the Investment Adviser.
For these services, the Investment Adviser receives an investment advisory
fee. The investment advisory fee is payable monthly and is computed as a
percentage of the Portfolio's average daily net assets at an annual rate of
0.50% of the first $400,000,000 of the average daily net assets; 0.35% of the
next $400,000,000 of the average daily net assets; and 0.30% of the average
daily net assets in excess of $800,000,000.
MONY also provided transfer agent services to the Fund until November 30,
1999, when transfer agency services were contracted with State Street Bank and
Trust Company. The fees associated with transfer agent services are included in
accounting fees in the accompanying statements of operations. Effective December
1, 1999, the Fund contracted with Enterprise Capital Management ("ECM"), a
wholly-owned subsidiary of MONY, to provide administrative services to the Fund.
ECM receives an administrative fee equal to 0.03% of the Fund's average daily
net assets.
Aggregate directors fees incurred for non-affiliated Directors' of the Fund
for the year ended December 31, 1999 amounted to $47,211.
16
<PAGE> 19
MONY SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
4. CAPITAL STOCK
A Authorized Capital Stock:
The Portfolio currently has 150 million authorized shares of capital stock
with a par value of $.01 per share.
5. PURCHASES AND SALES OF INVESTMENTS
For the year ended December 31, 1999, purchases and sales of investments
for the Portfolio, other than short-term investments, were $5,218,806 and
$7,868,228, respectively.
6. TAX BASIS UNREALIZED GAIN (LOSS) OF INVESTMENTS AND DISTRIBUTIONS
At December 31, 1999, the cost of securities for Federal income tax
purposes, the aggregate gross unrealized gain for all securities for which there
was an excess of value over tax cost and the aggregate gross unrealized loss for
all securities for which there was an excess of tax cost over value were as
follows:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED NET UNREALIZED
TAX COST GAIN LOSS GAIN (LOSS)
-------- ---------- ---------- --------------
<S> <C> <C> <C>
$13,170,320 $5,681,439 $(401,468) $5,279,971
</TABLE>
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from accounting principles generally
accepted in the United States. These differences are primarily due to differing
treatments for futures and options transactions, paydowns, market discounts, and
losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital. Any taxable
gain remaining at fiscal year end is distributed in the following year.
During the year ended December 31, 1999, the Equity Income Portfolio
increased undistributed realized gains and decreased undistributed net
investment income by $8,521. This reclassification is primarily due to return of
capital distributions received on investments. This reclassification had no
impact on net assets or net asset value per share.
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (UNAUDITED):
The capital gains distribution paid to shareholders from the Portfolio,
taken in additional shares, was $3,095,880.
17
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
MONY Series Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Equity Income Portfolio (one of
the portfolios constituting MONY Series Fund, Inc.) at December 31, 1999, the
results of its operations for the year then ended, the changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the MONY Series Fund Inc.'s management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 16, 2000
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
Robert H. Kramer Vice President-Compliance
David V. Weigel Treasurer
John P. Keller Controller
Frederick C. Tedeschi Secretary
INVESTMENT ADVISER
MONY Life Insurance Company of America
1740 Broadway
New York, New York 10019
PRINCIPAL UNDERWRITER AND DISTRIBUTOR
MONY Securities Corporation
1740 Broadway
New York, New York 10019
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
P. O. Box 1713
Boston, Massachusetts 02105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
</TABLE>
This report is authorized for distribution only to shareholders and to others
who have received a copy of this Fund's prospectus.
<PAGE> 22
*
---------------
KEYNOTE
SERIES
ACCOUNT
---------------
MONY LIFE INSURANCE COMPANY
One MONY Plaza
PO Box 48-30
Syracuse, New York 13221
MONY Life Insurance Company, New York, NY
