485BPOS 1 d485bpos.txt MONY VARIABLE ACCOUNT L As Filed with the Securities and Exchange Commission on April 30, 2003 Registration File No. 333-72590 811-06215 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ----------------- FORM N-6 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_] Pre-Effective Amendment No. [_] Post-Effective Amendment No. 4 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_] Amendment No. 5 [X]
(Check appropriate box or boxes.) MONY Variable Account L (Exact name of registrant) MONY Life Insurance Company (Name of depositor) 1740 Broadway New York, New York 10019 (Address of depositor's principal executive offices) Depositor's Telephone Number, including Area Code: (202) 708-2000 Haroula K. Ballas, Esq. Copy to: Senior Counsel--Operations Stephen E. Roth, Esq. MONY Life Insurance Sutherland Asbill & Company Brennan LLP 1740 Broadway 1275 Pennsylvania Avenue, New York, New York 10019 N.W. (Name and address of Washington, DC 20004-2415 agent for service)
----------------- It is proposed that this filing will become effective (check appropriate box) [_] immediately upon filing pursuant to paragraph (b). [X] on May 1, 2003 pursuant to paragraph (b). [_] 60 days after filing pursuant to paragraph (a)(1). [_] on pursuant to paragraph (a)(1) of Rule 485. If appropriate, check the following box: [_] This post-effective amendment designates a new effective date for a previously filed post-effective amendment. ----------------- Title of Securities Being Registered: Units of Interest in a Separate Account under Flexible Premium Variable Life Insurance Policies ================================================================================ MONY VARIABLE ACCOUNT L PROSPECTUS DATED MAY 1, 2003 FOR THE VARIABLE UNIVERSAL LIFE INSURANCE POLICY Issued by MONY Life Insurance Company 1740 Broadway New York, New York 10019 This prospectus describes an individual flexible premium variable life insurance policy offered by MONY Life Insurance Company ("we," "us," "our," or the "Company"). The Policy provides life insurance protection and premium flexibility. The Policy described in this prospectus is only available in New York. We guarantee that your death benefit will never be less than the amount specified in your Policy adjusted by any requested increases or decreases in your insurance protection, and less any debt you owe us. Investments (premium payments) may accumulate on a variable basis, fixed basis, or both. If you choose the variable option, we will invest your premium payments in your choice of subaccounts of our variable account. Each subaccount invests in shares of one of the following portfolios: The Alger American Fund . Alger American Balanced Portfolio . Alger American MidCap Growth Portfolio Enterprise Accumulation Trust . Equity Income Portfolio . Global Socially Responsive Portfolio . Growth Portfolio . Growth and Income Portfolio . Managed Portfolio . Multi-Cap Growth Portfolio . Small Company Growth Portfolio . Small Company Value Portfolio . Total Return Portfolio INVESCO Variable Investment Funds, Inc. . INVESCO VIF--Financial Services Fund . INVESCO VIF--Health Sciences Fund . INVESCO VIF--Telecommunications Fund Janus Aspen Series . Capital Appreciation Portfolio . Flexible Income Portfolio . International Growth Portfolio Lord Abbett Series Fund . Bond-Debenture Portfolio . Growth and Income Portfolio . Mid-Cap Value Portfolio MFS(R) Variable Insurance Trust/SM/ . MFS(R) Mid Cap Growth Series . MFS(R) New Discovery Series . MFS(R) Total Return Series . MFS(R) Utilities Series MONY Series Fund, Inc. . Government Securities Portfolio . Long Term Bond Portfolio . Money Market Portfolio PBHG Insurance Series Fund . PBHG Mid-Cap Portfolio . PBHG Select Value Portfolio PIMCO Variable Insurance Trust . Global Bond Portfolio . Real Return Portfolio . StocksPLUS Growth and Income Portfolio The Universal Institutional Funds, Inc. . Emerging Markets Equity Portfolio . Global Value Equity Portfolio . U.S. Real Estate Portfolio You bear the investment risk if you allocate your premium payments to the variable account. If you choose the fixed option, we will invest your premium payments in the guaranteed interest account where your payments will grow at a fixed rate of interest. We take the investment risk of premium payments allocated to the guaranteed interest account. The amount of life insurance may, and your Policy's value will, depend on the investment experience of the options you choose. If you already own a life insurance policy, it might not be to your advantage to replace your existing insurance coverage with this Policy or to finance the purchase or maintenance of this Policy through a loan or through withdrawals from another policy. An investment in this Policy is not a bank deposit. Neither the U.S. government nor any governmental agency insures or guarantees your investment in the Policy. The Securities and Exchange Commission has not approved or disapproved this Policy or determined that this prospectus is accurate or complete. Anyone who tells you otherwise is committing a federal crime. TABLE OF CONTENTS BENEFIT AND RISK SUMMARY.......................... 1 Policy Benefits.................................. 1 Life Insurance Protection...................... 1 Cash Benefits.................................. 1 Variety of Investment Options.................. 2 Supplemental Insurance Benefits................ 2 Policy Risks..................................... 2 Possible Adverse Tax Consequences.............. 2 Policy Termination............................. 2 Partial Surrender Limitations.................. 3 Effects of Policy Loans........................ 3 Policy is Suited Only for Long-Term Protection. 3 Portfolio Risks.................................. 3 Fee Table........................................ 3 ILLUSTRATIONS..................................... 9 MONY LIFE INSURANCE COMPANY....................... 19 MONY VARIABLE ACCOUNT L........................... 19 Changes To The Variable Account................ 19 THE PORTFOLIOS.................................... 19 Your Right To Vote Portfolio Shares............ 22 Disregard Of Voting Instructions............... 23 THE GUARANTEED INTEREST ACCOUNT................... 23 THE POLICY........................................ 24 Applying For A Policy.......................... 24 Temporary Insurance Coverage................... 24 Backdating..................................... 25 Owner.......................................... 25 Cancelling The Policy.......................... 25 PREMIUMS.......................................... 25 General........................................ 25 Initial Premium................................ 25 Tax-Free "Section 1035" Exchanges.............. 26 Scheduled Premiums............................. 26 Electronic Payments............................ 26 Unscheduled Premiums........................... 27 Repayment Of Outstanding Debt.................. 27 Allocating Premiums............................ 27 HOW YOUR FUND VALUE VARIES........................ 27 Fund Value..................................... 27 Cash Value..................................... 27 Subaccount Values.............................. 28 Subaccount Unit Value.......................... 28 Guaranteed Interest Account Value.............. 28 TRANSFERS......................................... 28 Transfers By Third Parties..................... 29 DEATH BENEFITS.................................... 29 Amount Of Death Benefit Proceeds Payable....... 29 Death Benefit Options.......................... 29 Changes In Death Benefit Options............... 31 Changing The Specified Amount.................. 31
i Increases............................................................. 31 Decreases............................................................. 32 OTHER OPTIONAL INSURANCE BENEFITS........................................ 32 Term Life Term Rider.................................................. 33 Spouse's Yearly Renewable Term Rider.................................. 33 Purchase Option Rider................................................. 33 Waiver of Monthly Deduction Rider..................................... 33 Children's Term Life Insurance Rider.................................. 33 BENEFITS AT MATURITY..................................................... 33 SURRENDERS AND PARTIAL SURRENDERS........................................ 33 Surrenders............................................................ 33 Partial Surrenders.................................................... 34 Effect Of Partial Surrenders On Fund Value And Death Benefit Proceeds. 34 LOANS.................................................................... 34 Effects Of Policy Loans............................................... 35 TERMINATION.............................................................. 35 General............................................................... 35 Special Rules For First Three Policy Years............................ 36 Amounts You Must Pay To Keep Your Policy In Effect.................... 36 Your Policy Will Remain In Effect During The Grace Period............. 36 Reinstatement......................................................... 37 PAYMENTS AND TELEPHONE TRANSACTIONS...................................... 37 Telephone Transactions................................................ 38 CHARGES AND DEDUCTIONS................................................... 38 Deductions From Premium Payments...................................... 39 Deductions From The Variable Account.................................. 40 Deductions From Fund Value - The Monthly Deduction.................... 40 Transaction Charges................................................... 42 TAX CONSIDERATIONS....................................................... 42 Introduction.......................................................... 42 Tax Status of the Policy.............................................. 43 Tax Treatment of Policy Benefits...................................... 43 Our Income Taxes...................................................... 45 OTHER POLICY INFORMATION................................................. 45 Exchange Privilege.................................................... 45 Paid-Up Insurance..................................................... 46 Assignment............................................................ 46 Settlement Options.................................................... 46 Misstatement of Age or Sex............................................ 46 Suicide Exclusion..................................................... 46 Incontestability...................................................... 46 Other Changes To Your Policy.......................................... 47 ADDITIONAL INFORMATION................................................... 47 Sale Of The Policies.................................................. 47 Other Information..................................................... 48 Legal Proceedings..................................................... 48 POLICY ILLUSTRATIONS..................................................... 48 PERFORMANCE INFORMATION.................................................. 48 FINANCIAL STATEMENTS..................................................... 49 GLOSSARY................................................................. 50 STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS.................... 52
ii BENEFIT AND RISK SUMMARY This summary provides you with a brief overview of the benefits and risks associated with the Policy. You should read the entire prospectus before purchasing the Policy. Important details regarding the Policy are contained in other sections of this Prospectus. Please consult your agent and refer to your Policy for details. If you are already entitled to favorable tax treatment, you should satisfy yourself that this Policy meets your other financial goals before you buy it. For your convenience, we have defined certain terms we use in the Glossary at the end of the Prospectus. We only offer this Policy in New York. Policy Benefits Life Insurance Protection . The Policy provides a means for you to accumulate life insurance that can pass free of federal and state income taxes to your Beneficiaries. . We will pay your Beneficiary a Death Benefit after the death of the last Insured while this Policy is in effect. There are three decisions you must make about the Death Benefit. First, when you apply for your Policy, you must decide how much life insurance coverage (the Specified Amount) you need on the Insured's life. Second, you must choose a Death Benefit option. Finally, you must decide which death benefit compliance test you would like - the Cash Value Accumulation Test (this test generally will not limit the amount you pay into the Policy), or the Guideline Premium/Cash Value Corridor Test (this test generally results in a greater Death Benefit amount). . We offer two Death Benefit options. Under Option 1, the Death Benefit equals the greater of: (a) the Specified Amount in force on the date of the Insured's death; or (b) the Fund Value on the date of the Insured's death multiplied by a death benefit percentage. Under Option 2, the Death Benefit equals the greater of: (a) the Specified Amount in force on the date of the Insured's death plus Fund Value on the date of the Insured's death; or (b) the Fund Value on the date of the Insured's death multiplied by a death benefit percentage. . You may change the Specified Amount and the Death Benefit option that you selected. . During the grace period, your Policy (including the Death Benefit) will remain in effect subject to certain conditions. See "Termination." Cash Benefits . You may borrow against your Policy for up to 90% of your Policy's Cash Value. If you do, we will transfer an amount equal to the loan from the Subaccounts and the Guaranteed Interest Account to the Loan Account as collateral for the loan. We charge interest on the loan, and we credit interest on amounts in the Loan Account. We deduct Outstanding Debt (i.e., the amount of your loan plus interest due) from Death Benefit proceeds and from the amount you receive at surrender. A loan may have tax consequences. . You may request a partial surrender at any time before the maturity date. Partial surrenders must be for at least $500. A partial surrender may decrease the Specified Amount and may decrease your Death Benefit, and we may assess a $10 partial surrender fee against your remaining Fund Value. Also, a partial surrender may have tax consequences. . While the Insured is alive, you can surrender your Policy at any time for its Cash Value. A surrender charge may apply. A surrender may have tax consequences. . If the Insured is alive on the maturity date, we will pay the Cash Value to the Owner. 1 . You decide how we pay proceeds under the Policy. We may pay the Cash Value and the Death Benefit proceeds as a lump sum or under one of our settlement options. Variety of Investment Options . You may allocate your net premiums (your premium payment less the deductions we take) among the Subaccounts and the Guaranteed Interest Account. . The Subaccounts invest in a wide variety of Funds that cover a broad spectrum of investment objectives and risk tolerances. Amounts invested in the Subaccounts will go up and down in value depending on the investment experience of the Fund portfolio in which the Subaccount is invested. . The Guaranteed Interest Account is part of our General Account. We will credit interest of at least 4.5% annually on amounts invested in the Guaranteed Interest Account. . As your needs or financial goals change, you can change your investment mix. You may transfer Fund Value among any of the Subaccounts or between the Subaccounts and the Guaranteed Interest Account while continuing to defer current income taxes. Supplemental Insurance Benefits . You may add additional insurance and other benefits to your Policy by rider. Please see "Other Benefits" for a description of the other optional benefits that we offer. Policy Risks Possible Adverse Tax Consequences . We expect that the Policy will generally be deemed a life insurance contract under federal tax law, and that the death benefit paid to the beneficiary will generally not be subject to federal income tax. However, due to lack of guidance, there is less certainty in this regard with respect to Policies issued on a substandard basis. . Depending on the total amount of premiums you pay, the Policy may be treated as a modified endowment contract (MEC) under federal tax laws. If this occurs, partial or full surrenders, pledges, as well as Policy loans, will be taxed as ordinary income to the extent there are earnings in the Policy. In addition, a 10% penalty tax may be imposed on the taxable portion of certain partial or full surrenders, pledges and loans. If the Policy is not treated as a MEC, full and partial surrenders will not be subject to tax to the extent of your investment in the Policy. Amounts in excess of your investment in the Policy, while subject to tax as ordinary income, will not be subject to a 10% penalty tax and pledges and loans should not be taxable. You should consult a qualified tax advisor for assistance in all tax matters involving your Policy. Policy Termination . If the value of your Policy can no longer cover the Policy's monthly charges and any loan interest due, your Policy will be in default and a grace period will begin. There is a risk that if partial surrenders, loans, and charges reduce your Cash Value to too low an amount and/or if the investment experience of your selected Subaccounts is unfavorable, then your Policy could terminate. In that case, you will have a 61-day grace period to make a sufficient payment. If you do not make a sufficient payment before the grace period ends, your Policy will terminate without value; all rights and benefits under your Policy, including your insurance coverage, will end. (Special rules, however, apply during the first three Policy Years - your Policy will not lapse if your Policy's Cash Value is greater than zero or the premiums you paid minus partial surrenders and Outstanding Debt is of a certain amount). After termination, you may reinstate your Policy within five years subject to certain conditions. 2 Partial Surrender Limitations . The minimum partial surrender amount is $500 (plus the applicable partial surrender fee). Partial surrenders may reduce the Death Benefit and the Specified Amount in your Policy, and will reduce the Fund Value of your Policy. A partial surrender charge of $10 will apply to the remaining Fund Value. Federal income taxes and a penalty tax may apply to partial surrenders. Effects of Policy Loans . A Policy loan, whether or not repaid, will affect your Policy's Fund Value over time because we transfer the amount of the loan from the Subaccounts and/or the Guaranteed Interest Account to the Loan Account and hold it as collateral. We then credit a fixed interest rate to the loan collateral. As a result, the loan collateral does not participate in the investment results of the Subaccounts and does not participate in the interest credited to the Guaranteed Interest Account. The longer the loan is outstanding, the greater the effect is likely to be. Depending on the performance of the Subaccounts and the extent, if any, of the difference in the interest rates credited to the Guaranteed Interest Account and the Loan Account, the effect could be favorable or unfavorable. . A Policy loan also reduces Death Benefit proceeds. A loan could make it more likely that a Policy would terminate. There is a risk if the loan reduces your Cash Value to too low an amount and investment experience is unfavorable, that the Policy will lapse, resulting in adverse tax consequences. You must submit a sufficient payment during the grace period to avoid the Policy's termination without value and the end of insurance coverage. Policy is Suited Only for Long-Term Protection . We designed the Policy to meet long-term financial goals. You should not purchase this Policy if you intend to surrender all or part of your Fund Value in the near future. Please note, if you surrender your Policy in the early Policy Years, the surrender charge may be significant. Portfolio Risks The value of your Policy is tied to the investment performance of the Fund portfolios and allocation percentages you choose. If those portfolios perform poorly, the value of your Policy will decrease. Values allocated to the portfolios are not guaranteed. Because we continue to deduct charges from Fund Value, if investment results are too low, the Cash Value of your Policy may fall to zero. In that case, the Policy will terminate without value and insurance coverage will no longer be in effect, unless you make an additional payment sufficient to prevent a termination during the 61-day grace period. On the other hand, if investment experience is sufficiently favorable and you have kept the Policy in force for a substantial time, you may be able to draw upon Fund Value through partial surrenders and Policy loans. Poor investment performance may also lower the amount of the death benefit payable under the Policy. The Funds provide a comprehensive description of the risks of each portfolio in their prospectuses. Fee Table The following tables describe the fees and expenses you may pay when buying, owning, and surrendering the Policy. If the amount of the charge depends on the personal characteristics of the Insured, then the fee table lists the minimum and maximum charges we assess under the Policy, and the fees and charges of an Insured with the characteristics set forth below. These charges may not be typical of the charges you will pay. The first table describes the fees and expenses that you may pay when buying the Policy, paying premiums, surrendering the Policy or taking a partial surrender from, transferring Fund Value between the Subaccounts and the Guaranteed Interest Account, or taking a loan. 3
Transaction Fees -------------------------------------------------------------------------------------------- Amount Deducted ---------------------------------------- When Charge is Guaranteed Current Charge Deducted Charge Charge -------------------------------------------------------------------------------------------- Sales Charge/1/ Upon receipt of 4% of premium 4% of premium each premium paid paid payment -------------------------------------------------------------------------------------------- Premium Tax Charge/2/ Upon receipt of 0.8% of premium 0.8% of premium each premium paid paid payment -------------------------------------------------------------------------------------------- DAC Tax Charge/2/ Upon receipt of 1.25% of premium 1.25% of premium each premium paid paid/3/ payment -------------------------------------------------------------------------------------------- Surrender Charge/4/ Upon surrender of the Policy . Minimum and $2.88 to $51.20 per $2.88 to $51.20 per Maximum Charge/5/ $1,000 Specified $1,000 Specified Amount of Fund Amount of Fund Value surrendered Value surrendered . Charge for a male $5.41 per $1,000 $5.41 per $1,000 Insured, issue age 35, Specified Amount Specified Amount preferred, non-smoker, of Fund Value of Fund Value Specified Amount of surrendered surrendered $250,000, 0 years after Policy issue, non- individual qualified plan -------------------------------------------------------------------------------------------- Partial Surrender Fee Upon a partial $10 $10 surrender of the Policy -------------------------------------------------------------------------------------------- Transfer Fee Upon transfer of $25 for each 0 Fund Value transfer of Fund Value after the 12th transfer in a Policy Year --------------------------------------------------------------------------------------------
/(1)/The sales charge varies by Policy Year and Specified Amount, and varies from 0.5% to 4.0% of each premium paid. /(2)/We reserve the right to increase or decrease the current or maximum charge for taxes resulting from a change in tax law or from any change in the relevant tax cost to us. /(3)/We do not assess this charge if you purchased the Policy in connection with an individual qualified plan or in other situations where the premiums received are not subject to this tax. /(4)/The surrender charge varies based on the Insured's issue age, gender, smoking status, risk class, and the number of years since Policy issue or any increases in Specified Amount. The surrender charge grades to zero over 15 years for Insured's with an issue age of less than 75 (and over 10 years for Insured's with an issue age over 75). The surrender charge shown may not be representative of the charge that a particular Owner will pay. Please see your Policy for more information about the surrender charge that applies to your Policy. You may obtain more information about your surrender charge from your agent or by contacting us at the address noted on the cover page of this prospectus. /(5)/The minimum guaranteed and current surrender charge is based on an Insured with the following characteristics: female, issue age 0, surrendering in Policy year 1; the maximum guaranteed and current surrender charge is based on an Insured with the following characteristics: male, standard, non-smoker, issue age 85, surrendering in Policy year 1. * * * 4 The next two tables describe the fees and expenses that you will pay periodically during the time that you own the Policy, not including portfolio fees and expenses.
Periodic Charges Other Than Portfolio Operating Expenses ---------------------------------------------------------------------------------------------- Amount Deducted --------------------------------------- When Charge is Guaranteed Current Charge Deducted Charge Charge ---------------------------------------------------------------------------------------------- Cost of Insurance Charge/6/ On Policy Date and each Monthly Anniversary Day . Minimum and $.06 to $83.33 per $.01 to $21.27 per Maximum Charge/7/ $1,000 of amount at $1,000 of amount at risk risk . Charge for a 35 year $.14 per $1,000 of $.07 per $1,000 of old, male, preferred, amount at risk amount at risk non-smoker, Specified Amount of $250,000, 0 years after Policy issue, non-individual qualified plan ---------------------------------------------------------------------------------------------- Administrative Charge On Policy Date and $5.00 $5.00 each Monthly Anniversary Day ---------------------------------------------------------------------------------------------- Per $1,000 of Specified On Policy Date and Amount Charge/8/ each Monthly Anniversary Day during first 10 Policy Years and for 10 years following an increase in Specified Amount for each new coverage segment/10/ . Minimum and $.06 to $.26 per $.06 to $.26 per Maximum Charges/9/ $1,000 Specified $1,000 Specified Amount Amount . Charge for a male $.06 per $1,000 $.06 per $1,000 Insured, issue age 35, Specified Amount Specified Amount preferred, non-smoker, Specified Amount of $250,000, 0 years after Policy issue, non- individual qualified plan ----------------------------------------------------------------------------------------------
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Periodic Charges Other Than Portfolio Operating Expenses ------------------------------------------------------------------------------------ Amount Deducted ------------------------------------------------- When Charge is Current Charge Deducted Guaranteed Charge Charge ------------------------------------------------------------------------------------ Mortality and Daily 0.001% (0.65% annually) 0.001% (0.65% annually) Expense Risk of Fund Value in each of Fund Value in each Charge Subaccount Subaccount ------------------------------------------------------------------------------------ Loan Interest On each Policy 0.75% of Account Value 0.75% of Account Value Spread/11/ anniversary after a in the Loan Account for in the Loan Account for loan is taken, or Policy years 1-10 (0.25% Policy years 1-10 (0.25% upon death, for Policy years 11+) for Policy years 11+) surrender, or lapse, if earlier ------------------------------------------------------------------------------------
/(6)/The cost of insurance charge and the cost of insurance charge for the Term Life Term Rider vary based on the Insured's issue age (or age on date of increase), gender, and risk class and the duration of the Policy. The cost of insurance charge shown the table may not be representative of the charge that a particular Owner will pay. Please see your Policy for more information about the guaranteed cost of insurance charge that applies to your Policy. You may obtain more information about your cost of insurance charge from your agent or by contacting us at the address noted on the cover page of this prospectus. /(7)/The minimum guaranteed cost of insurance charge assumes an Insured with the following characteristics: female, smoker, standard, issue age 4, 0 years since Policy issue; the minimum current cost of insurance charge assumes an Insured with the following characteristics: female, non-smoker, preferred, Specified Amount of less than $250,000, issue age 3, 0 years since Policy issue; the maximum guaranteed cost of insurance charge assumes an Insured with the following characteristics: all Insureds with attained age 99; the maximum current cost of insurance charge assumes an Insured with the following characteristics: male, smoker, standard, Specified Amount of less than $250,000, issue age 85, 14 years since Policy issue. /(8)/The Per $1,000 of Specified Amount charge varies based on the Insured's issue age (or age on date of increase) gender, risk class, and Specified Amount. The Per $1,000 of Specified Amount charge shown in the table may not be representative of the charge that a particular Owner will pay. Please see your Policy for more information about the Per $1,000 of Specified Amount charge that applies to your Policy. You may obtain more information about your Per $1,000 of Specified Amount charge from your agent or by contacting us at the address noted on the cover page of this prospectus. /(9)/The minimum guaranteed and current charge per $1,000 Specified Amount assumes an Insured with issue age 0; the maximum guaranteed and current charge per $1,000 Specified Amount assumes an Insured with issue age 85. /(10)/A coverage segment is the initial Specified Amount; each increase in Specified Amount is its own coverage segment. /(11)/The loan interest spread is the difference between the amount of interest we charge you on loans and the amount of interest we credit to amounts held in the Loan Account to secure your loans. We guarantee that the maximum interest we charge on loans will not exceed an effective annual rate of 5.25% for Policy years 1-10 and an effective annual rate of 4.75% for Policy years 11 and later. We guarantee that the minimum interest we credit to the Loan Account to secure your loans will be at least equal to an effective annual rate of 4.50%. * * *
Optional Rider Charges ------------------------------------------------------------------------------------------- Amount Deducted --------------------------------------- When Charge is Guaranteed Current Rider Deducted Charge Charge ------------------------------------------------------------------------------------------- Cost of Insurance Charge for On date of issuance Term Life Term Rider/6/ of rider and each Monthly Anniversary Day . Minimum and $0.08 to $10.45 per $0.04 to $6.59 per Maximum Charge/12/ $1,000 of term $1,000 of term insurance insurance . Charge for a 35 year-old $0.14 per $1,000 of $0.07 per $1,000 of male, non-smoker, 0 term insurance term insurance years after rider issue -------------------------------------------------------------------------------------------
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Optional Rider Charges -------------------------------------------------------------------------------------------- Amount Deducted --------------------------------------- When Charge is Guaranteed Current Rider Deducted Charge Charge -------------------------------------------------------------------------------------------- Spouse's Yearly Renewable On issuance of rider Term Rider/13/ and each Monthly Anniversary Day . Minimum and $0.07 to $3.23 per $0.07 to $3.23 per Maximum Charge/14/ $1,000 of term $1,000 of term insurance insurance . Charge for a 35 year $0.12 per $1,000 of $0.12 per $1,000 of old, female, non-smoker term insurance term insurance preferred with a Specified Amount in force of $250,000, 0 years from the issue date of the rider -------------------------------------------------------------------------------------------- Purchase Option Rider/15/ On issuance of rider and on each Monthly Anniversary Day until the Policy anniversary following the 49th birthday of the Insured . Minimum and $0.05 to $0.36 per $0.05 to $0.36 per Maximum Charge/16/ $1,000 of purchase $1,000 of purchase option insurance option insurance . Charge for a 35 year old $0.25 per $1,000 of $0.25 per $1,000 of purchase option purchase option insurance insurance -------------------------------------------------------------------------------------------- Waiver of Monthly Deduction On issuance of rider Rider/17/ and on each Monthly Anniversary Day until the Policy anniversary following the 65th anniversary birthday of the Insured. For issue ages under 5, charges commence with the Policy anniversary following the Insured's 5th birthday --------------------------------------------------------------------------------------------
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Optional Rider Charges -------------------------------------------------------------------------------------------- Amount Deducted --------------------------------------- When Charge is Guaranteed Current Rider Deducted Charge Charge -------------------------------------------------------------------------------------------- . Minimum and $0 to $0.15 per $0 to $0.15 per Maximum Charge/18/ $1,000 of Specified $1,000 of Specified Amount plus Term Amount plus Term Insurance Insurance . Charge for a 35 year $0.01 per $1,000 of $0.01 per $1,000 of old, male, non-smoker Specified Amount Specified Amount preferred plus Term plus Term Insurance Insurance -------------------------------------------------------------------------------------------- Children's Term Life Insurance On issuance of the Rider/19/ rider and on each Monthly Anniversary Day until the Policy anniversary following the Insured's 65th birthday . Minimum and $0.48 to $0.49 per $0.48 to $0.49 per Maximum Charge/20/ $1,000 of insurance $1,000 of insurance coverage coverage . Charge for a 35 year $0.48 per $1,000 of $0.48 per $1,000 of old, male, non-smoker, insurance coverage insurance coverage preferred, Specified Amount of $250,000, no Waiver of Monthly Deduction Specified Premiums Rider attached to the Policy, 0 years from the issue date of the rider --------------------------------------------------------------------------------------------
/(12)/The minimum guaranteed charge for this rider assumes an Insured with the following characteristics: female, non-smoker, preferred, issue age 18, 0 years since issue of rider, minimum Specified Amount of $100,000; the minimum current charge for this rider assumes an Insured with the following characteristics: female, non-smoker, preferred, issue age 20, 0 years since issue of rider, minimum Specified Amount of $100,000; the maximum guaranteed charge for this rider assumes an Insured with the following characteristics: male, smoker, issue age 79, minimum Specified Amount of $100,000; the maximum current charge for this rider assumes an Insured with the following characteristics: male, smoker, standard, issue age 60, 19 years since issue of rider, minimum Specified Amount of $100,000. /(13)/The Spouse's Yearly Renewable Term Rider charge varies based on the spouse's gender, age, smoking status, and the number of years that have passed since the rider was issued. The Spouse's Yearly Renewable Term Rider charge shown in the table may not be representative of the charge that a particular Owner will pay. Please see your Policy for more information about the Spouse's Yearly Renewable Term Rider charge that applies to your Policy. You may obtain more information about your Spouse's Yearly Renewable Term Rider charge from your agent or by contacting us at the address noted on the cover page of the prospectus. /(14)/The minimum guaranteed and current charge for this rider assumes an Insured with the following characteristics: female, issue age 18, non-smoker, and 0 years since the issue of the rider; the maximum guaranteed and current charge for this rider assumes an Insured with the following characteristics: male, smoker, issue age 70, and 0 years since the issue of the rider. /(15)/The Purchase Option Rider charge varies based on the age of the Insured. The rider charges shown in the table may not be representative of the charge that a particular Owner will pay. Please see your Policy for more information about the rider charges that apply to your Policy. You may obtain more information about your rider from your agent or by contacting us at the address noted on the cover page of the prospectus. 8 /(16)/The minimum guaranteed and current charge for this rider assumes an Insured with issue age 0; the maximum guaranteed and current charge for this rider assumes an Insured with issue age 46. /(17)/The Waiver of Monthly Deduction Rider charge varies based on the Insured's age, gender, and risk class. The rider charge shown in the table may not be representative of the charge that a particular Owner will pay. Please see your Policy for more information about the rider charge that applies to your Policy. You may obtain more information about your Rider charges from your agent or by contacting us at the address noted on the cover page of the prospectus. /(18)/The minimum guaranteed and current charge for the Waiver of Monthly Deduction Rider assumes an Insured with attained ages 0-4; the maximum guaranteed and current charge for the Waiver of Monthly Deduction Rider assumes an Insured with the following characteristics: attained age 64, male, smoker. /(19)/The Children's Term Life Insurance Rider varies based on the Insured's risk class. The rider charge shown in the table may not be representative of the charge that a particular Owner will pay. Please see your Policy for more information about the rider charge that applies to your Policy. You may obtain more information about your rider charges from your agent or by contacting us at the address noted on the cover page of the prospectus. /(20)/The minimum guaranteed and current charge for the Children's Term Life Insurance Rider assumes a standard class Insured and that a Waiver of Monthly Deduction Rider is not attached to the base Policy; the maximum guaranteed and current charge for the Children's Term Life Insurance Rider assumes a standard class Insured and that a Waiver of Monthly Deduction Rider is attached to the base Policy. * * * The following table shows the range of the total fees and expenses charged by the portfolios in which the Subaccounts invest. The purpose of the table is to assist you in understanding the various costs and expenses that you will bear indirectly by investing in the Subaccounts. The table reflects total operating expenses for the portfolios for the fiscal year ended December 31, 2002. Expenses of the portfolios may be higher or lower in future years than the figures stated below. For more information on the fees and expenses described in this table, see the prospectuses for the portfolios which accompany this Prospectus.
Total Annual Portfolio Operating Expenses (expenses that are deducted from portfolio assets): ------------------------------------------------------------------------------------- Total Annual Portfolio Operating Expenses (including management fees, Minimum Maximum distribution and/or service or 12b-1 fees, and other expenses) 0.54% 2.83%
The expense information regarding the Funds was provided by those Funds. We have not independently verified this information. We offer other variable life insurance policies which may also invest in the same (or many of the same) Fund Portfolios offered under the Policy. These policies may have different charges that could affect their subaccounts performing and they may offer different benefits. ILLUSTRATIONS The following tables illustrate how the key financial elements of the Policy work, specifically, how the Death Proceeds, Fund Values and Cash Values could vary over an extended period of time. In addition, each table compares these values with premiums paid accumulated with interest. The Policies illustrated include the following:
Sex Age Risk Class Benefit Option Specified Amount --- --- ---------- -------------- ---------------- Male 35 Preferred Non-smoker 1 $250,000 Male 35 Preferred Non-smoker 2 $250,000 Female 35 Preferred Non-smoker 1 $200,000 Female 35 Preferred Non-smoker 2 $200,000
The tables show how Death Proceeds, Fund Values and Cash Values of a hypothetical Policy could vary over an extended period of time if the Subaccounts of the Variable Account had constant hypothetical gross annual 9 investment returns of 0%, 6% or 10% over the periods indicated in each table. If the annual investment returns are not constant the Death Proceeds, Fund Values and Cash Values will be different if the returns averaged 0%, 6% or 10% over a period of years but went above or below those figures in individual Policy years. Depending on the timing and degree of fluctuations, the actual values could be substantially less than these shown, and may, under certain circumstances, result in the lapse of the Policy unless the Owner pays more than the stated premium. These illustrations assume that no Policy loan has been taken. The amounts shown would differ if unisex rates were used. The amounts shown for Death Proceeds, Fund Values and Cash Values reflect the fact the net investment return on the Policy is lower than the gross investment return on the Subaccounts of the Variable Account. This results from the charges levied against the Subaccounts of the Variable Account (i.e., the mortality and expense risk charge) as well as the premium loads, administrative charges and Surrender Charges. These charges include the charge against the Subaccounts for mortality and expense risks and the effect on each Subaccount's investment experience of the charge to Portfolio assets for investment management and direct expenses. The mortality and expense risk fee is 0.35% annually on a guaranteed basis. The tables also reflect a deduction for a daily investment advisory fee and for other expenses of the Portfolio at a rate equivalent to an annual rate of 1.07% of the arithmetic average daily net assets of the Portfolio. This hypothetical rate is representative of the average maximum investment advisory fee and other expenses of the Portfolios applicable to the Subaccounts of the Variable Account. Actual fees and other expenses vary by Portfolio. The effect of these investment management advisory fees on a 0% gross rate of return would result in a net rate of return of -1.07%, on 6% it would be 4.93%, and on 10% it would be 8.93%. The tables assume the deduction of charges including administrative and sales charges. For each age, there are tables for Death Benefit Options 1 and 2 and each option is illustrated using current and guaranteed policy cost factors. The tables reflect the fact that the Company does not currently make any charge against the Variable Account for state or federal taxes. If such a charge is made in the future, it will take a higher rate of return to produce after-tax returns of 0%, 6% or 10%. Please ask your agent if you would like a comparable illustration based on the age, gender and risk classification of the proposed Insured, and the initial Specified Amount and Scheduled Premium Payments of their choice. 10 MONY Variable Universal Life Flexible Premium Variable Life to Maturity Policy MALE ISSUE AGE: 35, PREFERRED NON-SMOKER PLANNED ANNUAL PREMIUM: $1,803.00 INITIAL SPECIFIED AMOUNT: $250,000 DEATH BENEFIT OPTION: 1 ASSUMING GUARANTEED CHARGES
Death Proceeds Fund Value Cash Value ------------------------- --------------------------- --------------------------- Annual Investment Return of Annual Investment Return of Annual Investment Return of End Of Policy Premium Gross Gross Gross Gross Gross Gross Gross Gross Gross Year Outlay 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 1 1,803 250,000 250,000 250,000 1,309 1,398 1,458 0 47 106 2 1,803 250,000 250,000 250,000 2,274 2,524 2,698 922 1,173 1,346 3 1,803 250,000 250,000 250,000 3,195 3,670 4,011 1,843 2,318 2,659 4 1,803 250,000 250,000 250,000 4,072 4,837 5,404 2,721 3,485 4,052 5 1,803 250,000 250,000 250,000 4,908 6,026 6,885 3,556 4,674 5,533 6 1,803 250,000 250,000 250,000 5,673 7,209 8,431 4,321 5,857 7,079 7 1,803 250,000 250,000 250,000 6,398 8,416 10,077 5,046 7,064 8,726 8 1,803 250,000 250,000 250,000 7,055 9,618 11,805 5,793 8,356 10,543 9 1,803 250,000 250,000 250,000 7,645 10,817 13,620 6,564 9,735 12,538 10 1,803 250,000 250,000 250,000 8,170 12,012 15,532 7,269 11,110 14,631 15 1,803 250,000 250,000 250,000 10,866 19,155 28,245 10,866 19,155 28,245 20 1,803 250,000 250,000 250,000 10,878 25,389 44,687 10,878 25,389 44,687 25 1,803 250,000 250,000 250,000 6,382 28,524 65,266 6,382 28,524 65,266 30 1,803 Lapsed 250,000 250,000 Lapsed 24,429 90,495 Lapsed 24,429 90,495 35 1,803 Lapsed 250,000 250,000 Lapsed 3,975 121,044 Lapsed 3,975 121,044 40 1,803 Lapsed Lapsed 250,000 Lapsed Lapsed 159,840 Lapsed Lapsed 159,840 45 1,803 Lapsed Lapsed 250,000 Lapsed Lapsed 218,579 Lapsed Lapsed 218,579 50 1,803 Lapsed Lapsed 340,221 Lapsed Lapsed 324,020 Lapsed Lapsed 324,020 55 1,803 Lapsed Lapsed 492,763 Lapsed Lapsed 469,298 Lapsed Lapsed 469,298 60 1,803 Lapsed Lapsed 688,089 Lapsed Lapsed 681,276 Lapsed Lapsed 681,276 65 1,803 Lapsed Lapsed 1,008,064 Lapsed Lapsed 998,083 Lapsed Lapsed 998,083
Premiums are assumed to be paid at the beginning of the year. All other values are at the end of the year. * Gross annual investment returns do not reflect deductions of the average investment advisory fees of the Portfolio Companies. Values reflect net investment returns of -1.07%, 4.93%, and 8.93%, which correspond to gross investment returns of 0.0%, 6.0% and 10.0%, respectively. The hypothetical investment results are illustrative only, and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by policyowners, and the different investment rates of return earned by the investment portfolios underlying the subaccounts. The Cash Value, Fund Value and Death Proceeds for a policy would be different from those shown if the actual rates of investment return applicable to the policy averaged 0.0%, 6.0%, or 10.0% over a period of years, but also fluctuated above or below those averages for individual policy years. No representations can be made that these hypothetical rates of return can be achieved for any one year, or sustained over any period of time. 11 MONY Variable Universal Life Flexible Premium Variable Life to Maturity Policy MALE ISSUE AGE: 35, PREFERRED NON-SMOKER PLANNED ANNUAL PREMIUM: $1,803.00 INITIAL SPECIFIED AMOUNT: $250,000 DEATH BENEFIT OPTION: 1 ASSUMING CURRENT CHARGES
Death Proceeds Fund Value Cash Value ------------------------- --------------------------- --------------------------- Annual Investment Return of Annual Investment Return of Annual Investment Return of End Of Policy Premium Gross Gross Gross Gross Gross Gross Gross Gross Gross Year Outlay 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 1 1,803 250,000 250,000 250,000 1,309 1,398 1,458 0 47 106 2 1,803 250,000 250,000 250,000 2,596 2,857 3,037 1,244 1,505 1,685 3 1,803 250,000 250,000 250,000 3,833 4,348 4,716 2,481 2,996 3,364 4 1,803 250,000 250,000 250,000 5,020 5,874 6,503 3,668 4,522 5,152 5 1,803 250,000 250,000 250,000 6,188 7,466 8,439 4,836 6,114 7,088 6 1,803 250,000 250,000 250,000 7,336 9,126 10,536 5,985 7,774 9,184 7 1,803 250,000 250,000 250,000 8,466 10,858 12,807 7,114 9,507 11,455 8 1,803 250,000 250,000 250,000 9,549 12,637 15,237 8,287 11,375 13,975 9 1,803 250,000 250,000 250,000 10,614 14,492 17,869 9,533 13,411 16,788 10 1,803 250,000 250,000 250,000 11,634 16,399 20,692 10,732 15,498 19,790 15 1,803 250,000 250,000 250,000 17,120 28,058 39,689 17,120 28,058 39,689 20 1,803 250,000 250,000 250,000 20,335 40,509 66,058 20,335 40,509 66,058 25 1,803 250,000 250,000 250,000 20,979 53,701 103,690 20,979 53,701 103,690 30 1,803 250,000 250,000 250,000 16,990 66,026 158,002 16,990 66,026 158,002 35 1,803 250,000 250,000 278,516 6,085 75,805 240,100 6,085 75,805 240,100 40 1,803 Lapsed 250,000 388,291 Lapsed 80,907 362,889 Lapsed 80,907 362,889 45 1,803 Lapsed 250,000 572,146 Lapsed 74,653 544,901 Lapsed 74,653 544,901 50 1,803 Lapsed 250,000 850,074 Lapsed 45,968 809,594 Lapsed 45,968 809,594 55 1,803 Lapsed Lapsed 1,246,637 Lapsed Lapsed 1,187,273 Lapsed Lapsed 1,187,273 60 1,803 Lapsed Lapsed 1,761,281 Lapsed Lapsed 1,743,842 Lapsed Lapsed 1,743,842 65 1,803 Lapsed Lapsed 2,610,436 Lapsed Lapsed 2,584,590 Lapsed Lapsed 2,584,590
Premiums are assumed to be paid at the beginning of the year. All other values are at the end of the year. * Gross annual investment returns do not reflect deductions of the average investment advisory fees of the Portfolio Companies. Values reflect net investment returns of -1.07%, 4.93%, and 8.93%, which correspond to gross investment returns of 0.0%, 6.0% and 10.0%, respectively. The hypothetical investment results are illustrative only, and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by policyowners, and the different investment rates of return earned by the investment portfolios underlying the subaccounts. The Cash Value, Fund Value and Death Proceeds for a policy would be different from those shown if the actual rates of investment return applicable to the policy averaged 0.0%, 6.0%, or 10.0% over a period of years, but also fluctuated above or below those averages for individual policy years. No representations can be made that these hypothetical rates of return can be achieved for any one year, or sustained over any period of time. 12 MONY Variable Universal Life Flexible Premium Variable Life to Maturity Policy MALE ISSUE AGE: 35, PREFERRED NON-SMOKER PLANNED ANNUAL PREMIUM: $1,803.00 INITIAL SPECIFIED AMOUNT: $250,000 DEATH BENEFIT OPTION: 2 ASSUMING GUARANTEED CHARGES
Death Proceeds Fund Value Cash Value --------------------------- --------------------------- --------------------------- Annual Investment Return of Annual Investment Return of Annual Investment Return of End Of Policy Premium Gross Gross Gross Gross Gross Gross Gross Gross Gross Year Outlay 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 1 1,803 251,308 251,398 251,457 1,308 1,398 1,457 0 46 105 2 1,803 252,268 252,518 252,691 2,268 2,518 2,691 917 1,167 1,339 3 1,803 253,183 253,656 253,996 3,183 3,656 3,996 1,831 2,304 2,644 4 1,803 254,051 254,812 255,376 4,051 4,812 5,376 2,700 3,460 4,024 5 1,803 254,876 255,986 256,839 4,876 5,986 6,839 3,524 4,634 5,487 6 1,803 255,627 257,149 258,359 5,627 7,149 8,359 4,275 5,797 7,007 7 1,803 256,336 258,331 259,973 6,336 8,331 9,973 4,984 6,979 8,622 8 1,803 256,973 259,502 261,658 6,973 9,502 11,658 5,711 8,240 10,397 9 1,803 257,540 260,661 263,419 7,540 10,661 13,419 6,458 9,580 12,338 10 1,803 258,038 261,809 265,263 8,038 11,809 15,263 7,137 10,908 14,362 15 1,803 260,538 268,535 277,295 10,538 18,535 27,295 10,538 18,535 27,295 20 1,803 260,216 273,820 291,880 10,216 23,820 41,880 10,216 23,820 41,880 25 1,803 255,298 275,017 307,712 5,298 25,017 57,712 5,298 25,017 57,712 30 1,803 Lapsed 267,526 321,409 Lapsed 17,526 71,409 Lapsed 17,526 71,409 35 1,803 Lapsed Lapsed 324,875 Lapsed Lapsed 74,875 Lapsed Lapsed 74,875 40 1,803 Lapsed Lapsed 301,661 Lapsed Lapsed 51,661 Lapsed Lapsed 51,661 45 1,803 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 50 1,803 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 55 1,803 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 60 1,803 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 65 1,803 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed
Premiums are assumed to be paid at the beginning of the year. All other values are at the end of the year. * Gross annual investment returns do not reflect deductions of the average investment advisory fees of the Portfolio Companies. Values reflect net investment returns of -1.07%, 4.93%, and 8.93%, which correspond to gross investment returns of 0.0%, 6.0% and 10.0%, respectively. The hypothetical investment results are illustrative only, and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by policyowners, and the different investment rates of return earned by the investment portfolios underlying the subaccounts. The Cash Value, Fund Value and Death Proceeds for a policy would be different from those shown if the actual rates of investment return applicable to the policy averaged 0.0%, 6.0%, or 10.0% over a period of years, but also fluctuated above or below those averages for individual policy years. No representations can be made that these hypothetical rates of return can be achieved for any one year, or sustained over any period of time. 13 MONY Variable Universal Life Flexible Premium Variable Life to Maturity Policy MALE ISSUE AGE: 35, PREFERRED NON-SMOKER PLANNED ANNUAL PREMIUM: $1,803.00 INITIAL SPECIFIED AMOUNT: $250,000 DEATH BENEFIT OPTION: 2 ASSUMING CURRENT CHARGES
Death Proceeds Fund Value Cash Value --------------------------- --------------------------- --------------------------- Annual Investment Return of Annual Investment Return of Annual Investment Return of End Of Policy Premium Gross Gross Gross Gross Gross Gross Gross Gross Gross Year Outlay 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 1 1,803 251,308 251,398 251,457 1,308 1,398 1,457 0 46 105 2 1,803 252,594 252,855 253,035 2,594 2,855 3,035 1,242 1,503 1,683 3 1,803 253,828 254,343 254,710 3,828 4,343 4,710 2,477 2,991 3,358 4 1,803 255,012 255,864 256,493 5,012 5,864 6,493 3,660 4,512 5,141 5 1,803 256,175 257,450 258,422 6,175 7,450 8,422 4,823 6,098 7,070 6 1,803 257,319 259,103 260,509 7,319 9,103 10,509 5,967 7,751 9,157 7 1,803 258,442 260,827 262,768 8,442 10,827 12,768 7,091 9,475 11,417 8 1,803 259,517 262,593 265,182 9,517 12,593 15,182 8,256 11,331 13,921 9 1,803 260,574 264,434 267,795 10,574 14,434 17,795 9,493 13,352 16,713 10 1,803 261,583 266,323 270,591 11,583 16,323 20,591 10,682 15,421 19,690 15 1,803 266,967 277,784 289,280 16,967 27,784 39,280 16,967 27,784 39,280 20 1,803 269,901 289,574 314,467 19,901 39,574 64,467 19,901 39,574 64,467 25 1,803 270,034 301,166 348,666 20,034 51,166 98,666 20,034 51,166 98,666 30 1,803 265,220 309,764 393,219 15,220 59,764 143,219 15,220 59,764 143,219 35 1,803 253,519 311,953 450,156 3,519 61,953 200,156 3,519 61,953 200,156 40 1,803 Lapsed 303,478 522,470 Lapsed 53,478 272,470 Lapsed 53,478 272,470 45 1,803 Lapsed 274,555 609,687 Lapsed 24,555 359,687 Lapsed 24,555 359,687 50 1,803 Lapsed Lapsed 713,301 Lapsed Lapsed 463,301 Lapsed Lapsed 463,301 55 1,803 Lapsed Lapsed 810,646 Lapsed Lapsed 560,646 Lapsed Lapsed 560,646 60 1,803 Lapsed Lapsed 888,985 Lapsed Lapsed 638,985 Lapsed Lapsed 638,985 65 1,803 Lapsed Lapsed 930,507 Lapsed Lapsed 680,507 Lapsed Lapsed 680,507
Premiums are assumed to be paid at the beginning of the year. All other values are at the end of the year. * Gross annual investment returns do not reflect deductions of the average investment advisory fees of the Portfolio Companies. Values reflect net investment returns of -1.07%, 4.93%, and 8.93%, which correspond to gross investment returns of 0.0%, 6.0% and 10.0%, respectively. The hypothetical investment results are illustrative only, and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by policyowners, and the different investment rates of return earned by the investment portfolios underlying the subaccounts. The Cash Value, Fund Value and Death Proceeds for a policy would be different from those shown if the actual rates of investment return applicable to the policy averaged 0.0%, 6.0%, or 10.0% over a period of years, but also fluctuated above or below those averages for individual policy years. No representations can be made that these hypothetical rates of return can be achieved for any one year, or sustained over any period of time. 14 MONY Variable Universal Life Flexible Premium Variable Life to Maturity Policy FEMALE ISSUE AGE: 35, PREFERRED NON-SMOKER PLANNED ANNUAL PREMIUM: $1,030.00 INITIAL SPECIFIED AMOUNT: $200,000 DEATH BENEFIT OPTION: 1 ASSUMING GUARANTEED CHARGES
Death Proceeds Fund Value Cash Value --------------------------- --------------------------- --------------------------- Annual Investment Return of Annual Investment Return of Annual Investment Return of End Of Policy Premium Gross Gross Gross Gross Gross Gross Gross Gross Gross Year Outlay 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 1 1,030 200,000 200,000 200,000 631 678 710 0 0 0 2 1,030 200,000 200,000 200,000 1,063 1,192 1,281 291 419 508 3 1,030 200,000 200,000 200,000 1,466 1,703 1,874 693 931 1,102 4 1,030 200,000 200,000 200,000 1,815 2,189 2,469 1,042 1,417 1,696 5 1,030 200,000 200,000 200,000 2,135 2,673 3,089 1,362 1,900 2,316 6 1,030 200,000 200,000 200,000 2,427 3,154 3,736 1,654 2,381 2,964 7 1,030 200,000 200,000 200,000 2,668 3,609 4,390 1,895 2,836 3,618 8 1,030 200,000 200,000 200,000 2,882 4,060 5,075 2,161 3,339 4,354 9 1,030 200,000 200,000 200,000 3,046 4,483 5,770 2,428 3,865 5,152 10 1,030 200,000 200,000 200,000 3,185 4,902 6,499 2,670 4,387 5,984 15 1,030 200,000 200,000 200,000 4,054 7,583 11,541 4,054 7,583 11,541 20 1,030 200,000 200,000 200,000 3,415 9,319 17,434 3,415 9,319 17,434 25 1,030 200,000 200,000 200,000 685 9,134 23,942 685 9,134 23,942 30 1,030 Lapsed 200,000 200,000 Lapsed 5,255 30,398 Lapsed 5,255 30,398 35 1,030 Lapsed Lapsed 200,000 Lapsed Lapsed 33,591 Lapsed Lapsed 33,591 40 1,030 Lapsed Lapsed 200,000 Lapsed Lapsed 27,029 Lapsed Lapsed 27,029 45 1,030 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 50 1,030 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 55 1,030 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 60 1,030 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 65 1,030 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed
Premiums are assumed to be paid at the beginning of the year. All other values are at the end of the year. * Gross annual investment returns do not reflect deductions of the average investment advisory fees of the Portfolio Companies. Values reflect net investment returns of -1.07%, 4.93%, and 8.93%, which correspond to gross investment returns of 0.0%, 6.0% and 10.0%, respectively. The hypothetical investment results are illustrative only, and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by policyowners, and the different investment rates of return earned by the investment portfolios underlying the subaccounts. The Cash Value, Fund Value and Death Proceeds for a policy would be different from those shown if the actual rates of investment return applicable to the policy averaged 0.0%, 6.0%, or 10.0% over a period of years, but also fluctuated above or below those averages for individual policy years. No representations can be made that these hypothetical rates of return can be achieved for any one year, or sustained over any period of time. 15 MONY Variable Universal Life Flexible Premium Variable Life to Maturity Policy FEMALE ISSUE AGE: 35, PREFERRED NON-SMOKER PLANNED ANNUAL PREMIUM: $1,030.00 INITIAL SPECIFIED AMOUNT: $200,000 DEATH BENEFIT OPTION: 1 ASSUMING CURRENT CHARGES
Death Proceeds Fund Value Cash Value ------------------------- --------------------------- --------------------------- Annual Investment Return of Annual Investment Return of Annual Investment Return of End Of Policy Premium Gross Gross Gross Gross Gross Gross Gross Gross Gross Year Outlay 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 1 1,030 200,000 200,000 200,000 631 678 710 0 0 0 2 1,030 200,000 200,000 200,000 1,252 1,386 1,479 479 613 706 3 1,030 200,000 200,000 200,000 1,839 2,100 2,287 1,066 1,327 1,514 4 1,030 200,000 200,000 200,000 2,393 2,821 3,137 1,620 2,048 2,365 5 1,030 200,000 200,000 200,000 2,914 3,549 4,034 2,142 2,776 3,261 6 1,030 200,000 200,000 200,000 3,404 4,284 4,981 2,631 3,512 4,208 7 1,030 200,000 200,000 200,000 3,863 5,028 5,983 3,090 4,256 5,210 8 1,030 200,000 200,000 200,000 4,291 5,781 7,044 3,570 5,060 6,323 9 1,030 200,000 200,000 200,000 4,690 6,543 8,170 4,072 5,925 7,552 10 1,030 200,000 200,000 200,000 5,082 7,339 9,391 4,567 6,824 8,876 15 1,030 200,000 200,000 200,000 7,299 12,316 17,729 7,299 12,316 17,729 20 1,030 200,000 200,000 200,000 8,627 17,683 29,356 8,627 17,683 29,356 25 1,030 200,000 200,000 200,000 8,802 23,260 45,755 8,802 23,260 45,755 30 1,030 200,000 200,000 200,000 6,948 28,143 68,656 6,948 28,143 68,656 35 1,030 200,000 200,000 200,000 2,316 31,450 101,537 2,316 31,450 101,537 40 1,030 Lapsed 200,000 200,000 Lapsed 31,005 150,367 Lapsed 31,005 150,367 45 1,030 Lapsed 200,000 237,321 Lapsed 18,895 226,020 Lapsed 18,895 226,020 50 1,030 Lapsed Lapsed 354,980 Lapsed Lapsed 338,076 Lapsed Lapsed 338,076 55 1,030 Lapsed Lapsed 523,302 Lapsed Lapsed 498,383 Lapsed Lapsed 498,383 60 1,030 Lapsed Lapsed 742,505 Lapsed Lapsed 735,153 Lapsed Lapsed 735,153 65 1,030 Lapsed Lapsed 1,102,593 Lapsed Lapsed 1,091,676 Lapsed Lapsed 1,091,676
Premiums are assumed to be paid at the beginning of the year. All other values are at the end of the year. * Gross annual investment returns do not reflect deductions of the average investment advisory fees of the Portfolio Companies. Values reflect net investment returns of -1.07%, 4.93%, and 8.93%, which correspond to gross investment returns of 0.0%, 6.0% and 10.0%, respectively. The hypothetical investment results are illustrative only, and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by policyowners, and the different investment rates of return earned by the investment portfolios underlying the subaccounts. The Cash Value, Fund Value and Death Proceeds for a policy would be different from those shown if the actual rates of investment return applicable to the policy averaged 0.0%, 6.0%, or 10.0% over a period of years, but also fluctuated above or below those averages for individual policy years. No representations can be made that these hypothetical rates of return can be achieved for any one year, or sustained over any period of time. 16 MONY Variable Universal Life Flexible Premium Variable Life to Maturity Policy FEMALE ISSUE AGE: 35, PREFERRED NON-SMOKER PLANNED ANNUAL PREMIUM: $1,030.00 INITIAL SPECIFIED AMOUNT: $200,000 DEATH BENEFIT OPTION: 2 ASSUMING GUARANTEED CHARGES
Death Proceeds Fund Value Cash Value --------------------------- --------------------------- --------------------------- Annual Investment Return of Annual Investment Return of Annual Investment Return of End Of Policy Premium Gross Gross Gross Gross Gross Gross Gross Gross Gross Year Outlay 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 1 1,030 200,631 200,678 200,709 631 678 709 0 0 0 2 1,030 201,061 201,189 201,278 1,061 1,189 1,278 288 416 505 3 1,030 201,460 201,697 201,867 1,460 1,697 1,867 688 925 1,095 4 1,030 201,805 202,178 202,456 1,805 2,178 2,456 1,033 1,406 1,683 5 1,030 202,121 202,655 203,068 2,121 2,655 3,068 1,348 1,883 2,295 6 1,030 202,407 203,128 203,705 2,407 3,128 3,705 1,634 2,355 2,933 7 1,030 202,641 203,572 204,345 2,641 3,572 4,345 1,868 2,799 3,572 8 1,030 202,847 204,010 205,012 2,847 4,010 5,012 2,126 3,289 4,291 9 1,030 203,003 204,418 205,685 3,003 4,418 5,685 2,385 3,800 5,067 10 1,030 203,132 204,819 206,387 3,132 4,819 6,387 2,617 4,304 5,872 15 1,030 203,933 207,347 211,173 3,933 7,347 11,173 3,933 7,347 11,173 20 1,030 203,197 208,772 216,427 3,197 8,772 16,427 3,197 8,772 16,427 25 1,030 200,390 208,058 221,510 390 8,058 21,510 390 8,058 21,510 30 1,030 Lapsed 203,448 224,985 Lapsed 3,448 24,985 Lapsed 3,448 24,985 35 1,030 Lapsed Lapsed 222,095 Lapsed Lapsed 22,095 Lapsed Lapsed 22,095 40 1,030 Lapsed Lapsed 204,407 Lapsed Lapsed 4,407 Lapsed Lapsed 4,407 45 1,030 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 50 1,030 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 55 1,030 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 60 1,030 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed 65 0 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed
Premiums are assumed to be paid at the beginning of the year. All other values are at the end of the year. * Gross annual investment returns do not reflect deductions of the average investment advisory fees of the Portfolio Companies. Values reflect net investment returns of -1.07%, 4.93%, and 8.93%, which correspond to gross investment returns of 0.0%, 6.0% and 10.0%, respectively. The hypothetical investment results are illustrative only, and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by policyowners, and the different investment rates of return earned by the investment portfolios underlying the subaccounts. The Cash Value, Fund Value and Death Proceeds for a policy would be different from those shown if the actual rates of investment return applicable to the policy averaged 0.0%, 6.0%, or 10.0% over a period of years, but also fluctuated above or below those averages for individual policy years. No representations can be made that these hypothetical rates of return can be achieved for any one year, or sustained over any period of time. 17 MONY Variable Universal Life Flexible Premium Variable Life to Maturity Policy FEMALE ISSUE AGE: 35, PREFERRED NON-SMOKER PLANNED ANNUAL PREMIUM: $1,030.00 INITIAL SPECIFIED AMOUNT: $200,000 DEATH BENEFIT OPTION: 2 ASSUMING CURRENT CHARGES
Death Proceeds Fund Value Cash Value --------------------------- --------------------------- --------------------------- Annual Investment Return of Annual Investment Return of Annual Investment Return of End Of Policy Premium Gross Gross Gross Gross Gross Gross Gross Gross Gross Year Outlay 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 0.0%* 6.0%* 10.0%* 1 1,030 200,631 200,678 200,709 631 678 709 0 0 0 2 1,030 201,250 201,385 201,477 1,250 1,385 1,477 478 612 705 3 1,030 201,836 202,097 202,283 1,836 2,097 2,283 1,063 1,324 1,511 4 1,030 202,388 202,815 203,131 2,388 2,815 3,131 1,615 2,042 2,358 5 1,030 202,906 203,539 204,023 2,906 3,539 4,023 2,134 2,766 3,250 6 1,030 203,392 204,269 204,963 3,392 4,269 4,963 2,620 3,497 4,191 7 1,030 203,847 205,006 205,956 3,847 5,006 5,956 3,074 4,234 5,184 8 1,030 204,269 205,750 207,006 4,269 5,750 7,006 3,548 5,029 6,285 9 1,030 204,661 206,501 208,117 4,661 6,501 8,117 4,043 5,883 7,499 10 1,030 205,046 207,284 209,319 5,046 7,284 9,319 4,531 6,769 8,804 15 1,030 207,201 212,136 217,457 7,201 12,136 17,457 7,201 12,136 17,457 20 1,030 208,425 217,226 228,558 8,425 17,226 28,558 8,425 17,226 28,558 25 1,030 208,439 222,242 243,682 8,439 22,242 43,682 8,439 22,242 43,682 30 1,030 206,367 226,004 263,479 6,367 26,004 63,479 6,367 26,004 63,479 35 1,030 201,552 227,277 289,184 1,552 27,277 89,184 1,552 27,277 89,184 40 1,030 Lapsed 223,352 321,361 Lapsed 23,352 121,361 Lapsed 23,352 121,361 45 1,030 Lapsed 205,678 355,144 Lapsed 5,678 155,144 Lapsed 5,678 155,144 50 1,030 Lapsed Lapsed 382,711 Lapsed Lapsed 182,711 Lapsed Lapsed 182,711 55 1,030 Lapsed Lapsed 378,361 Lapsed Lapsed 178,361 Lapsed Lapsed 178,361 60 1,030 Lapsed Lapsed 327,333 Lapsed Lapsed 127,333 Lapsed Lapsed 127,333 65 0 Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed Lapsed
Premiums are assumed to be paid at the beginning of the year. All other values are at the end of the year. * Gross annual investment returns do not reflect deductions of the average investment advisory fees of the Portfolio Companies. Values reflect net investment returns of -1.07%, 4.93%, and 8.93%, which correspond to gross investment returns of 0.0%, 6.0% and 10.0%, respectively. The hypothetical investment results are illustrative only, and should not be deemed a representation of past or future investment results. Actual investment results may be more or less than those shown, and will depend on a number of factors, including the investment allocations by policyowners, and the different investment rates of return earned by the investment portfolios underlying the subaccounts. The Cash Value, Fund Value and Death Proceeds for a policy would be different from those shown if the actual rates of investment return applicable to the policy averaged 0.0%, 6.0%, or 10.0% over a period of years, but also fluctuated above or below those averages for individual policy years. No representations can be made that these hypothetical rates of return can be achieved for any one year, or sustained over any period of time. 18 MONY LIFE INSURANCE COMPANY We are a stock life insurance company organized in the State of New York. Our principal offices are located at 1740 Broadway, New York, New York 10019. We are obligated to pay all benefits promised under the Policy. MONY VARIABLE ACCOUNT L We established MONY Variable Account L as a separate account under New York law on November 28, 1990. We divided the Variable Account into subdivisions called Subaccounts. Each Subaccount invests exclusively in shares of a designated portfolio of the Funds. The assets in the Variable Account belong to us. Assets equal to the reserves and other liabilities of the Variable Account will not be charged with liabilities that arise from any other business that we conduct. Realized or unrealized income gains or losses from assets allocated to the Variable Account and of each Subaccount are credited to or charged against the Variable Account and that Subaccount without regard to other income, gains or losses of the Company. We reserve the right to credit or charge a Subaccount in a different manner if required, or appropriate, by reason of a change in law. We may from time to time transfer to our General Account, assets which exceed the reserves and other liabilities of the Variable Account. Changes to the Variable Account We may add new Subaccounts that are not available under the Policy. We may substitute a portfolio for another portfolio of that Fund or of another Fund, if in our judgment, the portfolio no longer suits the purposes of the Policy due to a change in its investment objectives or restrictions. The new portfolio may have higher fees and charges than the one it replaced, and not all portfolios may be available to all classes of Policies. No substitution may take place without prior notice to you and prior approval of the SEC and insurance regulatory authorities, to the extent required by the Investment Company Act of 1940 (the "1940 Act") and applicable law. We may also, where permitted by law: . create new separate accounts; . combine separate accounts, including the Variable Account; . deregister the Variable Account under the 1940 Act; and . operate the Variable Account under the direction of a committee or in any other form permitted by law. We will notify you of any changes we make. THE PORTFOLIOS You decide the Subaccounts to which you direct premiums or transfer Fund Value. There is a separate Subaccount which corresponds to each portfolio of a Fund offered in the Policy. Each Fund is registered with the SEC as an open-end management investment company under the 1940 Act. The assets of each portfolio are separate from other portfolios of a Fund and each portfolio has separate investment objectives and policies. As a result, the investment performance of one portfolio has no effect on the investment performance of any other portfolio. Janus Aspen Series Capital Appreciation is a non-diversified, open-end management investment company. A non-diversified Fund may hold a larger position in a smaller number of securities than a diversified Fund. This means that a single security's increase or decrease in value may have a greater impact on the return and net asset value of a non-diversified Fund than a diversified Fund. 19 Before you choose a Subaccount to allocate your premiums and transfer Fund Value, carefully read the prospectus for each Fund, along with this prospectus. Please call your agent or our Operations Center to obtain each Fund prospectus. We summarize the investment objectives of each portfolio below. There is no assurance that any of the portfolios will meet these objectives. You should know that during extended periods of low interest rates, the yields of the MONY Money Market Subaccount may become extremely low and possibly negative. The investment objectives and policies of certain portfolios are similar to the investment objectives and policies of other portfolios that may be managed by the same investment adviser or manager. The investment results of the portfolios, however, may be higher or lower than the results of such portfolios. There can be no assurance, and no representation is made, that the investment results of any of the portfolios will be comparable to the investment results of any other portfolio, even if the other portfolio has the same investment adviser or manager. The following table lists the Subaccounts of the Variable Account that are available under the Policy.
Adviser Subaccount Fund/Type of Portfolio (and Sub-Adviser, as applicable) ---------------------------------------------------------------------------------------- The Alger American Fund ---------------------------------------------------------------------------------------- Alger American Balanced Domestic Hybrid Fred Alger Management, Inc. Subaccount ---------------------------------------------------------------------------------------- Alger American MidCap Growth Mid-Cap Growth Fred Alger Management, Inc. Subaccount ---------------------------------------------------------------------------------------- Enterprise Accumulation Trust ---------------------------------------------------------------------------------------- Enterprise Equity Income Large Value Enterprise Capital Management, Inc. Subaccount (subadvised by Boston Advisers, Inc.) ---------------------------------------------------------------------------------------- Enterprise Global Socially World Stock Enterprise Capital Responsive Subaccount Management, Inc. (subadvised by Rockefeller & Co., Inc.) ---------------------------------------------------------------------------------------- Enterprise Growth Subaccount Large Growth Enterprise Capital Management, Inc. (subadvised by Montag & Caldwell, Inc.) ---------------------------------------------------------------------------------------- Enterprise Growth and Income Large Value Enterprise Capital Subaccount Management, Inc. (subadvised by UBS Global Asset Management (US), Inc.) ---------------------------------------------------------------------------------------- Enterprise Managed Subaccount Large Value Enterprise Capital Management, Inc. (subadvised by Wellington Management Company, LLP) ---------------------------------------------------------------------------------------- Enterprise Multi-Cap Growth Mid-Cap Growth Enterprise Capital Subaccount Management, Inc. (subadvised by Fred Alger Management Inc.) ---------------------------------------------------------------------------------------- Enterprise Small Company Small Growth Enterprise Capital Growth Subaccount Management, Inc. (subadvised by William D. Witter, Inc.) ---------------------------------------------------------------------------------------- Enterprise Small Company Small Value Enterprise Capital Value Subaccount Management, Inc. (subadvised by Gabelli Asset Management Company) ----------------------------------------------------------------------------------------
20
Adviser Subaccount Fund/Type of Portfolio (and Sub-Adviser, as applicable) ----------------------------------------------------------------------------------------- Enterprise Accumulation Trust ----------------------------------------------------------------------------------------- Enterprise Total Return Intermediate-Term Bond Enterprise Capital Subaccount Management, Inc. (subadvised by Pacific Investment Management Company, LLC) ----------------------------------------------------------------------------------------- INVESCO Variable Investment Funds, Inc. ----------------------------------------------------------------------------------------- INVESCO VIF Financial Specialty-Financial INVESCO Funds Group, Inc. Services Subaccount ----------------------------------------------------------------------------------------- INVESCO VIF Health Sciences Specialty-Health INVESCO Funds Group, Inc. Subaccount ----------------------------------------------------------------------------------------- INVESCO VIF Specialty-Technology INVESCO Funds Group, Inc. Telecommunications Subaccount ----------------------------------------------------------------------------------------- Janus Aspen Series ----------------------------------------------------------------------------------------- Janus Aspen Series Capital Large Growth Janus Capital Appreciation Subaccount ----------------------------------------------------------------------------------------- Janus Aspen Series Flexible Multisector Bond Janus Capital Income Subaccount ----------------------------------------------------------------------------------------- Janus Aspen Series International Foreign Stock Janus Capital Growth Subaccount ----------------------------------------------------------------------------------------- Lord Abbett Series Fund ----------------------------------------------------------------------------------------- Lord Abbett Bond-Debenture High Yield Bond Lord, Abbett & Co., LLC Subaccount ----------------------------------------------------------------------------------------- Lord Abbett Growth and Income Large Value Lord, Abbett & Co., LLC Subaccount ----------------------------------------------------------------------------------------- Lord Abbett Mid-Cap Value Mid-Cap Value Lord, Abbett & Co., LLC Subaccount ----------------------------------------------------------------------------------------- MFS(R) Variable Insurance Trust/SM/ ----------------------------------------------------------------------------------------- MFS(R) Mid Cap Growth Mid-Cap Growth MFS(R) Investment Management Subaccount ----------------------------------------------------------------------------------------- MFS(R) New Discovery Small Growth MFS(R) Investment Management Subaccount ----------------------------------------------------------------------------------------- MFS(R) Total Return Subaccount Domestic Hybrid MFS(R) Investment Management ----------------------------------------------------------------------------------------- MFS(R) Utilities Subaccount Specialty-Utilities MFS(R) Investment Management ----------------------------------------------------------------------------------------- MONY Series Fund, Inc. ----------------------------------------------------------------------------------------- MONY Government Securities Short Government MONY Life Insurance Company of Subaccount America ----------------------------------------------------------------------------------------- MONY Long Term Bond Long-Term Bond MONY Life Insurance Company of Subaccount America ----------------------------------------------------------------------------------------- MONY Money Market Money Market MONY Life Insurance Company of Subaccount America ----------------------------------------------------------------------------------------- PBHG Insurance Series Fund ----------------------------------------------------------------------------------------- PBHG Mid-Cap Subaccount Mid-Cap Value Pilgrim Baxter & Associates, Ltd. ----------------------------------------------------------------------------------------- PBHG Select Value Subaccount Large Value Pilgrim Baxter & Associates, Ltd. -----------------------------------------------------------------------------------------
21
Adviser Subaccount Fund/Type of Portfolio (and Sub-Adviser, as applicable) --------------------------------------------------------------------------------------- PIMCO Variable Insurance Trust --------------------------------------------------------------------------------------- PIMCO Global Bond Subaccount Intermediate-Term Bond Pacific Investment Management Company, LLC --------------------------------------------------------------------------------------- PIMCO Real Return Subaccount Long-Term Bond Pacific Investment Management Company, LLC --------------------------------------------------------------------------------------- PIMCO StocksPLUS Growth Large Blend Pacific Investment Management and Income Subaccount Company, LLC --------------------------------------------------------------------------------------- The Universal Institutional Funds, Inc. --------------------------------------------------------------------------------------- Van Kampen UIF Emerging Diversified Emerging Morgan Stanley Investment Markets Equity Subaccount Markets Management Inc., which does business in certain instances using the name "Van Kampen," is the investment adviser to the Universal Institutional Funds, Inc. --------------------------------------------------------------------------------------- Van Kampen UIF Global Value World Stock Morgan Stanley Investment Equity Subaccount Management Inc., which does business in certain instances using the name "Van Kampen," is the investment adviser to the Universal Institutional Funds, Inc. --------------------------------------------------------------------------------------- Van Kampen UIF U.S. Real Specialty-Real Estate Morgan Stanley Investment Estate Subaccount Management Inc., which does business in certain instances using the name "Van Kampen," is the investment adviser to the Universal Institutional Funds, Inc. ---------------------------------------------------------------------------------------
We have entered into agreements with either the investment adviser or distributor of each of the Funds under which the adviser or distributor pays us a fee ordinarily based upon an annual average percentage of the average aggregate net amount we have invested on behalf of the Variable Account and other separate accounts. These percentages differ, and some investment advisers or distributors pay us more than others. These agreements reflect administrative services we provide. The amounts we receive under these agreements may be significant. In addition, our affiliate, MONY Securities Corporation, the principal underwriter for the Policies, will receive 12b-1 fees deducted from portfolio assets of certain Funds for providing distribution and shareholder support services to the portfolios. Your Right to Vote Portfolio Shares As required by law, we will vote portfolio shares held in the Variable Account at any regular and special meetings of the shareholders of the Funds. We will exercise these voting rights based on the instructions received from Owners having the voting interest in corresponding Subaccounts of the Variable Account. We may elect to vote the shares of the Funds in our own right if the 1940 Act or any regulations thereunder is amended, and as a result, we determine that it is permitted to vote the shares of the Funds in our right. We will determine the number of votes which you have the right to cast by dividing your Fund Value in a Subaccount that corresponds to the portfolio by $100. Fractional votes will be counted. The number of Owner votes will be determined as of the date we set. However, such date will not be more than 90 days before the date established by the corresponding Fund for determining shareholders eligible to vote at that Fund's meeting. If required by the SEC, we reserve the right to determine the voting rights in a different fashion. You may cast your voting instructions in person or by proxy. 22 We will vote portfolio shares for which we received no timely instructions in proportion to the voting instructions which are received for all Policies participating in that Subaccount. We will apply voting instructions to abstain on any item to be voted on a pro-rata basis to reduce the number of votes eligible to be cast. Disregard of Voting Instructions We may disregard voting instructions when required by state insurance regulatory authorities, if, (1) the instructions require that voting rights be exercised so as to cause a change in the subclassification or investment objective of a portfolio, or (2) to approve or disapprove an investment advisory contract. In addition, we may disregard voting instructions of changes initiated by Owners or the investment adviser (or portfolio manager) of a portfolio. Our disapproval of such change must be reasonable and must be based on a good faith determination that the change would be contrary to state law or otherwise inappropriate, considering the portfolio's objectives and purpose, and considering the effect the change would have on us. If we do disregard voting instructions, a summary of that action and the reasons for such action will be included in the next report to Owners. THE GUARANTEED INTEREST ACCOUNT Due to certain exemptive and exclusionary provisions of the federal securities laws, we have not registered interests in the Guaranteed Interest Account or our General Account under the Securities Act of 1933 or under the 1940 Act. Accordingly, neither the Guaranteed Interest Account nor any interest therein is generally subject to the provisions of these Acts and, as a result, the staff of the SEC has not reviewed the disclosure in this prospectus relating to the Guaranteed Interest Account. Disclosures regarding the Guaranteed Interest Account may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in the prospectus. For more details regarding the Guaranteed Interest Account, please see your Policy. You may allocate all or a portion of your net premiums and transfer Fund Value to our Guaranteed Interest Account. Amounts allocated to the Guaranteed Interest Account become part of the General Account, which supports insurance and annuity obligations. The amounts allocated to the General Account are subject to the liabilities arising from the businesses we conduct. Subject to applicable law, we have sole discretion over the investment of the assets of the General Account. We guarantee that we will credit the Fund Value in the Guaranteed Interest Account with a minimum interest rate of 0.0121% compounded daily, for a minimum effective annual rate of 4.5%. We may, in our sole discretion, declare current interest in excess of the 4.5% effective annual rate. We may declare excess interest based on such factors including, but not limited to, regulatory and tax requirements, sales commissions, and administrative expenses borne by us, general economic trends, and competitive factors. We cannot predict or guarantee future excess interest rates. Before the beginning of each calendar month, we will declare an interest rate. The declared rate will apply to premium payments and transfers into the Guaranteed Interest Account made during the calendar month. To obtain the rate, please contact your agent. The calendar year and month the payment or transfer is made determines the "generation" of such monies. The current interest may be credited from the date of the payment or transfer for a period of 12 months beginning the first day of the monthly generation to which the payment or transfer is assigned. After the first 12 months, a renewal interest rate may be declared for a new 12-month period. At the end of the renewal period, all monies will earn an interest rate which is declared monthly and applies for a one-month period. Any rate we declare in excess of the minimum interest rate may be changed or discontinued by us at anytime after it is declared, but such change or discontinuance will only affect the crediting of interest that accrues after the change or discontinuance. We bear the full investment risk for the Fund Value allocated to the Guaranteed Interest Account. 23 THE POLICY We designed the Policy to meet the needs of individuals as well as for corporations who provide coverage and benefits for key employees. Applying for a Policy To purchase a Policy, you must complete an application and then have your agent submit it to us at our Operations Center. After you have done this, it can sometimes take several weeks for us to gather and evaluate the information we need to decide whether to issue a Policy to you and if so, what the Insured's risk class should be. After we approve an application for a Policy and assign the appropriate risk class, we will prepare the Policy for delivery. You must pay an initial premium of a sufficient amount before or at the time we deliver your Policy. (If you submit your initial premium with your application, we will place your premium in our General Account where it will earn interest at an effective annual rate of at least 4.5%). See "Premiums." Coverage generally becomes effective on the Policy Date. We will not pay a Death Benefit before the Policy Date unless temporary insurance coverage, as discussed below, was in effect. We will issue a Policy covering an Insured who is up to and including age 85, providing we receive evidence of insurability that satisfies us. If a qualified plan will own the Policy, the Insured cannot be more than 70 years old. Required evidence of insurability may include, among other things, a medical examination of the Insured. We may reject an application for any lawful reason. Temporary Insurance Coverage You may apply for temporary insurance coverage. To be eligible for such coverage, the Insured must be between the ages of 15 days and 71 years old and must be able to satisfactorily answer several health questions. Your initial premium must be in the amount of at least the Minimum Monthly Premium (see below) for the Policy for which you applied. This coverage will take effect on the date you sign the application and pay the premium. Temporary insurance coverage will end on the earliest of: . the policy release date (i.e., the date we authorize the Policy to be delivered to you), if the Policy is issued as applied for; . the 15th day after the policy release date or the date the Policy takes effect, if the policy is issued other than as applied for; no later than 90 days from the date the temporary insurance agreement is signed; the 45th day after the form is signed if you have not finished the last required medical exam; 5 days after we send notice to you that we declined to issue any Policy; and . the date you tell us that the Policy will be refused. We will pay a Death Benefit if the Insured dies during the period of temporary coverage. This Death Benefit will be: 1.the insurance coverage applied for (including any optional riders) up to $500,000, less 2.the deductions from premium and the monthly deduction due prior to the date of death. We hold the premiums paid for temporary insurance coverage in our General Account until the policy release date. If we issue the Policy, we will apply these amounts to your Policy. Please contact your agent and see the Statement of Additional Information for more information about temporary insurance coverage rates based on a younger insurance age. 24 Backdating We will not backdate a Policy for more than six months (a shorter period is required in certain states) before the date of your application. For a backdated Policy, Monthly Deductions will begin on the backdated Policy Date. You therefore will incur charges before you otherwise would have if you had not backdated your Policy, and your initial premium payment must be in an amount sufficient to cover the extra Monthly Deduction charges for the backdating period. Owner You have all of the rights and benefits under the Policy while the Insured is living. These rights include the right to change the Beneficiary, to assign the Policy, to transfer Fund Value, or make full or partial surrenders. Canceling the Policy You may cancel a Policy during the "Right to Return Policy" period by returning it to us at our Operations Center, or to the agent who sold it, and receive a refund of the full amount of the premium paid. The Right to Return Policy period runs for the later of (a) 10 days after you receive the Policy; (b) 45 days after you signed the application; or (c) 10 days after we mail or deliver a notice of withdrawal right. PREMIUMS General We will usually credit your initial premium payment to the Policy on the later of the date we approve your Policy or the date we receive your payment. We will credit any subsequent premium to the Policy on the Business Day we receive it at our Operations Center. The total premiums you pay may not exceed guideline premium limitations for the insurance set forth in the Internal Revenue Code of 1986, as amended (the "Code"). We may reject any premium, or any portion of a premium, that would result in the Policy being disqualified as life insurance under the Code. We will refund any rejected premium. We will tell you before we process a transaction, whether once we process the transaction, your Policy is in jeopardy of becoming a modified endowment contract under the Code. Initial Premium You must pay an amount equal to at least the Minimum Monthly Premium to put the Policy in effect. However, if you want to pay premiums less often than monthly, the premium required to put the Policy in effect is equal to the Minimum Monthly Premium multiplied by 12 divided by the frequency of the scheduled premium payments. We base your Minimum Monthly Premium on a number of factors. These factors include: 1.your Specified Amount; 2.any riders you added to the Policy; and 3.the Insured's age, smoking status, gender (unless unisex rates apply), and risk class. We show the Minimum Monthly Premium in your Policy. After you pay this initial premium, subject to the limitations described below, you may choose the amount and frequency of premium payments to reflect your varying financial conditions. 25 Tax-Free "Section 1035" Exchanges You can generally exchange one life insurance policy for another on the life of the same insured in a "tax-free exchange" under Section 1035 of the Internal Revenue Code. Before making an exchange, you should compare both policies carefully. Remember that if you exchange another policy for the one described in this Prospectus, you might have to pay a surrender charge on your old policy. The charges for this Policy may be higher (or lower) and the benefits may be different. If the exchange does not qualify for Section 1035 treatment, you may have to pay federal income and penalty taxes on the exchange. You should not exchange another policy for this one unless you determine, after knowing all the facts, that the exchange is in your best interest and not just better for the person trying to sell you this Policy (that person will generally earn a commission if you buy this Policy through an exchange or otherwise). Scheduled Premiums Your initial Minimum Monthly Premium is the only premium you must pay under the Policy. However, you greatly increase your risk of Policy termination if you do not regularly pay premiums at least as large as the Minimum Monthly Premium. Paying your Minimum Monthly Premiums will not necessarily keep your Policy in force. Additional premiums may be necessary to keep the Policy in force. You may pay your premiums according to the schedule you established when you applied for the Policy. This scheduled premium payment provides for the payment of level premiums at fixed intervals over a specified period of time, and equals, at least, the Minimum Monthly Premium multiplied by 12 divided by the scheduled premium payment frequency. We will send you a premium reminder notice for the scheduled premium payment amount on an annual, semiannual or quarterly basis, at your option. You should change the amount of your scheduled premium payments if: . you increase your Specified Amount; . you change your Death Benefit option; . you change or add a rider; . you take a partial surrender when you have elected Death Benefit Option 1 (see "Death Benefit"); or . you select Subaccounts that experience adverse investment performance. You can change the amount and interval of payment of scheduled premiums at any time by writing us at our Operations Center. However, the new payment interval must satisfy our rules in use at the time of the change. We will issue an endorsement to your Policy after you increase the Specified Amount that will provide you with the increased Minimum Monthly Premium amount. Please note: During the first three Policy Years or the three Policy Years following an increase in Specified Amount (if that increase became effective during the first three Policy Years), premiums paid less partial surrenders (excluding their fees) and any Outstanding Debt must at least equal the Minimum Monthly Premium times the number of months the Policy has been in force. Electronic Payments You may have your bank automatically pay your premiums to us. If you authorize us, we will withdraw premiums from your bank account each month by electronic funds transfer. Based on your Policy Date, we may require that up to two Minimum Monthly Premiums be paid in cash before premiums may be paid by electronic funds transfer to the Company. 26 Unscheduled Premiums In general, you may make premium payments at any time and in any amount. However, we may reject or limit any unscheduled premium payment that would result in an immediate increase in the Death Benefit payable, unless you provide us with satisfactory evidence of insurability at the time of payment. If satisfactory evidence of insurability is not received, we may return the payment in whole or in part. In addition, we will reject all or a part of a premium payment and return it to you if the premium would exceed the maximum premium limitations prescribed by the federal income tax law definition of life insurance. Repayment of Outstanding Debt We will treat payments you send to us as premium payments, and not as repayment of Outstanding Debt, unless you request otherwise. If you request that the payment be treated as a repayment of Outstanding Debt, any part of a payment that exceeds the amount of Outstanding Debt will be applied to your Fund Value as a premium payment. Applicable taxes and sales charges are only deducted from any payment that constitutes a premium payment. Allocating Premiums When you apply for a Policy, you specify the percentage of your net premium payments we are to allocate to the Subaccounts and to the Guaranteed Interest Account. Allocations must be in whole percentages, no allocation may be for less than 5% of a net premium, and allocation percentages must total 100%. You may change your allocations at any time by writing or calling our Operations Center. The change will apply to your net premium payments you make after we receive your instructions. We will allocate your initial premium payment to our General Account until the end of the "Right to Return Policy" period. At the end of that period, we will transfer your Net Premium to the Subaccounts and/or Guaranteed Interest Account you designated. After the "Right to Return Policy" period, we will allocate your net premiums to the Subaccounts and/or Guaranteed Account on the Business Day that we receive the premium payment. If you make an unscheduled premium payment, you may specify an allocation choice that differs from your allocation choice for your scheduled premium payments. This choice will not change your allocation choice for future scheduled premiums. Your allocation must be whole numbers only, each allocation must be for at least 5% of the unscheduled net premium, and the total must be 100% of the unscheduled net premium. HOW YOUR FUND VALUE VARIES Fund Value Fund Value is the entire amount we hold under your Policy for you. Fund Value serves as the starting point for calculating certain values under a Policy. It is the sum of the total amount under the Policy in each Subaccount, the amount held in the Guaranteed Interest Account, and the amount held in the Loan Account. We determine Fund Value first on your Policy Date, and after that, on each Business Day. Your Fund Value will vary to reflect the performance of the Subaccounts to which you have allocated amounts and interest we credit on amounts in the Guaranteed Interest Account, and will also vary to reflect Outstanding Debt, charges for the Monthly Deduction, mortality and expense risk charges, partial surrenders, and loan repayments. Your Fund Value may be more or less than the premiums you paid. Cash Value Your Cash Value on any Business Day is the Fund Value reduced by any surrender charge and any Outstanding Debt. 27 Subaccount Values On any Business Day, the value of a Subaccount equals the number of Units we credit to the Policy multiplied by the Unit value for that Day. We make the calculation before the purchase or redemption of Units on that Day. Every time you allocate or transfer money to or from a Subaccount, we convert that dollar amount into Units. When you make allocations to a Subaccount, either by premium allocation, transfer of Fund Value, transfer of loan interest from the General Account, or repayment of a loan, we credit your Policy with Units in a Subaccount. When we assess the Monthly Deduction, and when you take a loan, a partial surrender, or transfer from a Subaccount, we decrease the number of Units you hold in a Subaccount. Subaccount Unit Value We arbitrarily set the Unit value for each Subaccount at $10 when we established the Subaccount. After that, a Subaccount's Unit value varies to reflect the investment experience of the underlying portfolio, and may increase or decrease from one Business Day to the next. We determine Unit value, after a Subaccount's operations have begun, by multiplying the net investment factor for that Business Day by the Unit value for the immediately preceding Business Day. The net investment factor is an index we use to measure the investment performance of a Subaccount from one Business Day to the next. The net investment factor for each Subaccount on a Business Day is obtained by subtracting (b) from (a) and dividing by (c), where: a) is the per share net asset value on the Business Day of the applicable Fund portfolio in which the Subaccount invests times the number of such shares held in the Subaccount before the purchase or redemption of any shares on that Day; b) is the mortality and expense risk charge accrued as of that Business Day; and c) is the total number of Units held in the Subaccount on the Business Day before the purchase or redemption of any Units on that Day. Guaranteed Interest Account Value On any Business Day, Fund Value in the Guaranteed Interest Account is: . the accumulated value with interest on the net premiums allocated and amounts transferred to, the Guaranteed Interest Account before that Day; minus . withdrawals from the Guaranteed Interest Account before that Day for any partial surrender and its fee, any amounts transferred from the Guaranteed Interest Account and the transfer charge, if any, and any Monthly Deductions. TRANSFERS After the Right to Return Policy period has ended, you may transfer all or a portion of your Fund Value between and among the Subaccounts of the Variable Account and the Guaranteed Interest Account subject to certain conditions. Transfers from a Subaccount will take effect at the end of the Business Day we receive your request at our Operations Center. Transfers from the Guaranteed Interest Account will take effect on the policy anniversary, or if later, at the end of the Business Day we receive your request at our Operations Center. We may postpone transfers to, from, or among the Subaccounts under certain circumstances. See "Payments and Telephone Transactions." 28 We restrict transfers from the Guaranteed Interest Account. You may only transfer Fund Value from the Guaranteed Interest Account once each Policy Year. We must receive your request to transfer Fund Value from the Guaranteed Interest Account within 10 days before or 30 days after a policy anniversary. When thinking about a transfer of Fund Value, you should consider the inherent risk involved. Frequent transfers based on short-term expectations may increase the risk that a transfer will be made at an inopportune time. We consider a request for a transfer to be one transaction. We may charge for transfers. See "Charges and Deductions." Transfers By Third Parties As a general rule and as a convenience to you, we allow you to give a third party the right to effect transfers on your behalf. However, when the same third party makes transfers for many Owners, the result can be simultaneous transfers involving large amounts of Fund Value. Such transfers can disrupt the orderly management of the portfolios underlying the Policy, can result in higher costs to Owners, and are generally not compatible with the long-range goals of Owners. We believe that such simultaneous transfers effected by such third parties are not in the best interests of all shareholders of the Funds, and the managements of the Funds share this position. Therefore, to the extent necessary to reduce the adverse effects of simultaneous transfers made by third parties who make transfers on behalf of multiple Owners, we may not honor such transfers. We will notify you in writing if we do not process a transfer request. Also, we will institute procedures to assure that the transfer requests that we receive have, in fact, been made by the Owners in whose names they have been submitted. These procedures will not, however, prevent Owners from making their own transfer requests. DEATH BENEFITS As long as your Policy is in effect and before the maturity date, we will pay the Death Benefit proceeds upon receipt at our Operations Center of satisfactory proof of the Insured's death. We may postpone payment of the death benefit under certain conditions. See "Payments and Telephone Transactions." We will pay the proceeds to the Beneficiary. Amount of Death Benefit Proceeds Payable The amount of Death Benefit proceeds payable equals: 1.the Policy's Death Benefit; plus 2.any insurance proceeds provided by rider; less 3.any Outstanding Debt, and if the death of the Insured occurs during any period for which a Monthly Deduction has not been made, any Monthly Deduction that may apply to that period, including the deduction for the month of death. Under certain circumstances, we may further adjust the amount of the Death Benefit proceeds payable. See "Incontestability," and "Misstatement of Age or Sex," and "Suicide Exclusion." Death Benefit Options When you apply for the Policy, you have to make three choices to make about your Death Benefit. First, you must select the death benefit compliance test; second, you must tell us how much life insurance you want on the Insured; and finally, you must select a Death Benefit option. 29 The Policy must satisfy alternative death benefit compliance tests to qualify as life insurance under section 7702 of the Code: the Cash Value Accumulation Test or the Guideline Premium/Cash Value Corridor Test. Each test effectively requires that the Policy's Death Benefit, plus any outstanding loans and accrued interest thereon, and any unpaid Monthly Deductions, always be equal to or greater than the Fund Value multiplied by a certain death benefit percentage. Under the Cash Value Accumulation test, the death benefit percentages vary by Insured's attained age, gender and smoking status and in general, will not limit the amount you can pay into the Policy; under the Guideline Premium/Cash Value Corridor Test, the death benefit percentages vary by the Insured's attained age, and will limit the amount you pay into the Policy. Your minimum Death Benefit will generally be larger should you select the Cash Value Accumulation Test, while your Fund Value will generally be greater in the long term under the Guideline Premium/Cash Value Corridor Test because your amount at risk will be lower which may result in lower cost of insurance charges in later Policy Years. In most situations, the Death Benefit that results from the Cash Value Accumulation Test will be more than the Death Benefit that results from the Guideline Premium/Cash Value Corridor Test. However, under the Guideline Premium/Cash Value Corridor Test, the premiums you pay into the Policy will be limited. Under the Cash Value Accumulation Test, there is no limit to the amount that may be paid in premiums as long as there is enough Death Benefit in relation to Fund Value at all times. Once you choose the test, you cannot change it. You also must tell us how much life insurance coverage you want on the life of the Insured. We call this the Specified Amount. The minimum Specified Amount is $50,000. Finally, you tell us whether you want Death Benefit Option 1 or Death Benefit Option 2. If you prefer to have premium payments and any favorable investment performance reflected partly in the form of an increasing Death Benefit, you should consider choosing Death Benefit Option 2. If you are satisfied with the amount of the Insured's existing insurance coverage and prefer to have premium payments and any favorable investment performance reflected to the maximum extent in Fund Value (thus reducing the cost of insurance charges) you should consider choosing Death Benefit Option 1. If you do not select a Death Benefit Option, we will assume you selected Death Benefit Option 2. Subject to certain restrictions, you may change your Death Benefit Option, see below. Under Death Benefit Option 1, your Death Benefit will be the greater of: a.the Specified Amount in effect on the date of the Insured's death; or b.Fund Value on the date of the Insured's death multiplied by a death benefit percentage. Under Death Benefit Option 2, your Death Benefit will be the greater of: a.the Specified Amount in effect on the date of the Insured's death, plus Fund Value on the date of the Insured's Death; or b.Fund Value on the date of the Insured's death multiplied by a death benefit percentage. The death benefit percentage will vary by the definition of life insurance you selected. A table showing the death benefit percentages is in your Policy. Examples of Options 1 and 2 The following examples demonstrate how we calculate the Death Benefit under Options 1 and 2. The examples show two Policies with the same Specified Amount, but Fund Values that vary as shown. We assume that the Insured is age 65 at the time of death and that there is no Outstanding Debt. We also assume that the date of death was on a Monthly Anniversary Day. Policy 1 shows what your Death Benefit would be for a Policy with low Fund Value. Policy 2 shows what your Death Benefit would be for a Policy with a higher Fund Value.
Policy 1 Policy 2 -------- -------- Specified Amount............................................ $100,000 $100,000 Fund Value on Date of Death................................. $ 35,000 $ 85,000 Death Benefit Percentage.................................... 120% 120% Death Benefit under Option 1................................ $100,000 $102,000 Death Benefit under Option 2................................ $135,000 $185,000
30 Changes in Death Benefit Options You may change the Death Benefit option under your Policy by writing us at our Operations Center. If you change from Death Benefit Option 1 to Death Benefit Option 2, you must provide us with satisfactory evidence of insurability. We do not require evidence of insurability if you change from Death Benefit Option 2 to Death Benefit Option 1. The effective date of a change requested between monthly anniversaries will be the next Monthly Anniversary Day after we accept the change. If you change from Death Benefit Option 1 to Death Benefit Option 2, we will reduce your Policy's Specified Amount by the amount of the Policy's Fund Value at the date of the change. We will not permit you to change from Death Benefit Option 1 to Death Benefit Option 2 if the change would result in a new Specified Amount of less than $100,000. If you change from Death Benefit Option 2 to Death Benefit Option 1, we will increase the Specified Amount of your Policy by the amount of the Policy's Fund Value at the date of the change. The change to Death Benefit Option 1 will generally reduce the Death Benefit payable in the future. We will automatically change your Death Benefit option to Death Benefit Option 2 if the Insured becomes disabled and the Waiver of Monthly Deduction Benefit rider is in effect. Additional information about the riders available under the Policy is available from your agent. A change in the Death Benefit option may affect the monthly cost of insurance charge since this charge varies with the amount at risk. Generally, the amount at risk is the amount by which the Death Benefit exceeds Fund Value. See "Deductions from Fund Value - The Monthly Deduction." If the Policy's Death Benefit is not based on the death benefit percentage under Death Benefit Option 1 or Death Benefit Option 2, changing from Option 2 to Option 1 will generally decrease the amount at risk. Therefore, this change may decrease the cost of insurance charges. Changing from Death Benefit Option 1 to Death Benefit Option 2 will generally result in an amount at risk that remains level. However, such a change will result in an increase in the cost of insurance charges over time because the cost of insurance rates increase with the Insured's age. Changing the Specified Amount You may change the Specified Amount under your Policy subject to the conditions described below. Increasing the Specified Amount will generally increase your Policy's Death Benefit. Decreasing the Specified Amount will generally decrease your Policy's Death Benefit. The amount of change in the Death Benefit depends on (1) the Death Benefit option chosen, and (2) whether the Death Benefit under the Policy is being computed using the death benefit percentage at the time of the change. Changing the Specified Amount could affect the subsequent level of Policy values. For example, an increase in Specified Amount may increase the amount at risk, which will increase your cost of insurance charges over time. Conversely, a decrease in Specified Amount may decrease the amount at risk, which may decrease your cost of insurance over time. We offer a term life insurance rider. Depending on your circumstances, it may be more cost effective for you to purchase this rider rather than increasing your Specified Amount. We will not permit any change that would result in your Policy being disqualified as a life insurance contract under Section 7702 of the Code. However, changing the Specified Amount may have other tax consequences. You should consult a tax adviser before changing the Specified Amount. Increases . You may increase the Specified Amount by submitting a written application and evidence of insurability to us at our Operations Center. The increase will take effect on the Monthly Anniversary Day that falls on, or next follows, the date we approve it. 31 . You can only increase the Specified Amount until the Insured's age 85. . Your cost of insurance charges will increase. . The increase will create a new "coverage segment." There will be a surrender charge associated with this coverage segment. We will allocate Fund Value after the increase first to the original coverage segment, and then to each coverage segment in order of the increases. . Your Minimum Monthly Premium will increase, and we will make this adjustment prospectively to reflect the increase. . If the Specified Amount is increased when a premium payment is received, we will process the increase before we process the premium payment. Decreases . You may decrease the Specified Amount (or the amount of term insurance added by rider) by submitting a written application to us at our Operations Center. The decrease will take effect on the Monthly Anniversary Day that falls on, or next follows, the date we approve it. . You may not decrease the Specified Amount below $100,000. . We will apply any decrease in your Specified Amount (whether requested by you or resulting from a partial surrender or a Death Benefit option change): 1.to reduce the coverage segments of Specified Amount associated with the most recent increases in Specified Amount; then 2.to the next most recent increases successively; and last 3.to the original Specified Amount. . Your Minimum Monthly Premium will not be adjusted for the decrease in the Specified Amount. . If the Specified Amount is decreased when a premium payment is received, we will process the decrease before we process the premium payment. . Rider coverages may be affected by a decrease in Specified Amount. . We will reject a decrease in Specified Amount, if, to effect the decrease, payments to you would have to be made from Fund Value for compliance with the guideline premium limitations, and the amount of the payments would exceed the Cash Value of your Policy. If a requested change is not approved, we will send you a written notice of our decision. OTHER OPTIONAL INSURANCE BENEFITS Subject to certain requirements, you may elect to add one or more optional insurance benefits when you apply for your Policy. These other optional benefits are added to your Policy by an addendum called a rider. As applicable, a charge is deducted monthly from the Fund Value for each optional benefit added to your policy. You can cancel these benefits at any time. Certain restrictions may apply, and are described in the applicable rider. In addition, adding or canceling these benefits may have an effect on your Policy's status as a modified endowment contract. 32 The following riders are available under the Policy: Term Life Term Rider The Term Life Term Rider provides additional death benefits on the life of the Insured until the Insured reaches age 80. The minimum amount of coverage is $25,000. You may convert the rider coverage without evidence of insurability to any level premium, level face amount permanent policy of insurance offered by the Company. The conversion must occur before the Insured's age 65 or 5 years from the issue of the rider, whichever is later. Spouse's Yearly Renewable Term Rider This rider provides for term insurance benefits on the life of the Insured's spouse, to the spouse's age 80. Purchase Option Rider This rider provides the option to purchase additional coverage as specified in the rider at specific ages or after specific events without providing additional evidence that the Insured remains insurable. Waiver of Monthly Deduction Rider This rider provides for the waiver of certain charges while the Insured has a covered disability and the Policy is in effect. While the Insured is disabled, no deductions are made for (1) monthly administrative charges, (2) Per $1,000 Specified Amount charges, (3) cost of insurance charges, and rider charges. Children's Term Life Insurance Rider This rider provides term insurance coverage on the lives of the children of the Insured under age 18. The coverage continues to the policy anniversary after the child's 22nd birthday. Contact our Operations Center or your agent for additional information about the riders. BENEFITS AT MATURITY The maturity date for this Policy is the policy anniversary following the Insured's 100th birthday. If the Insured is living on the maturity date, we will pay to you, as an endowment benefit, the Cash Value of the Policy. We will not accept premiums, nor will we take Monthly Deductions, after the maturity date. SURRENDERS AND PARTIAL SURRENDERS Surrenders You may cancel and surrender your Policy at any time before the Insured dies by sending a written request together with the Policy to our Operations Center. Your Policy will terminate at end of the Business Day we receive your request. The amount you will receive will be your Policy's Fund Value less (1) any surrender charge, and (2) any Outstanding Debt. Unless you select an optional payment plan, we will pay any proceeds in a lump sum. A surrender may have adverse tax consequences. See "Tax Considerations." 33 Partial Surrenders Until the maturity date, you may make a partial surrender at any time from your Policy by writing us at our Operations Center. We will process your partial surrender request at the end of the Business Day we receive your request. Your partial surrender must be for at least $500 (plus its fee). We will not allow a partial surrender if your Fund Value after the partial surrender (including the partial surrender fee) would be less than $500 or would result in a Specified Amount in force of less than $100,000. If you have taken a loan on your Policy, the amount of the partial surrender is limited so that the loan amount, after the partial surrender, is not greater than 90% of Cash Value. You must allocate an amount or percent of your Fund Value in the Subaccounts and the Guaranteed Interest Account from which we are to take your partial surrender. Allocations by percentages must be in whole percentages and the minimum percentage is 10% against any Subaccount or the Guaranteed Interest Account. Percentages must total 100%. We will reject an allocation which does not comply with the rules or if there is not enough Fund Value in a Subaccount or the Guaranteed Interest Account to provide its share of the allocation. If the Insured dies after the request for a partial surrender is sent to us and before it is effected, the amount of the partial surrender will be deducted from the Death Benefit proceeds. We will determine the Death Benefit proceeds taking into account the amount surrendered. Effect of Partial Surrenders on Fund Value and Death Benefit Proceeds When you make a partial surrender and you selected Death Benefit Option 1, we decrease the Specified Amount of your Policy by the amount of the partial surrender (excluding its fee). If you selected Death Benefit Option 2, a partial surrender will not change the Specified Amount of your Policy. However, if the Death Benefit is not equal to the Fund Value times a death benefit percentage, we will reduce the Death Benefit by the amount of the partial surrender. Under either Death Benefit Option, if the Death Benefit is based on the Fund Value times the applicable death benefit percentage, the Death Benefit may decrease by an amount greater than the partial surrender. There is a fee for each partial surrender of $10. Partial surrenders may have adverse tax consequences. See "Tax Considerations." LOANS You may borrow up to 90% of your Cash Value at any time by writing us at our Operations Center. (If you request a loan on a Monthly Anniversary Day, the maximum loan is reduced by the Monthly Deduction due on that day.) Your Policy is the only security for the loan. A loan may have tax consequences. You should consult your tax adviser before borrowing from your Policy. To secure a loan, we transfer an amount equal to the loan proceeds from Fund Value in the Variable Account and the Guaranteed Interest Account to our Loan Account. You tell us from where we are to transfer this Fund Value. You can specify loan allocations by amount or percentages. Allocations by percentage must be in whole percentages and the minimum percentage is 10% against any Subaccount or the Guaranteed Interest Account. If you do not specify an allocation, or if we cannot process your loan allocations because they do not comply with our rules or there is not enough Fund Value in a Subaccount and/or the Guaranteed Interest Account to comply with your request, we will reject your request for a loan. We pay interest monthly on amounts allocated to our Loan Account at an annual rate not less than 4.5%. We may pay excess interest in our sole discretion. We will allocate amounts in the Loan Account that exceed your Outstanding Debt to the Variable Account and/or Guaranteed Interest Account as we determine. 34 We normally pay the amount of the loan within seven calendar days after we receive a proper request for a loan at our Operations Center. We may postpone payment of loan under certain conditions. See "Payments and Telephone Transactions." We charge interest on a loan. Loan interest is payable in arrears on each policy anniversary, and varies by the number of years since we issued your Policy. The interest you must pay on the loan is as follows:
--------------------------------------------- Policy Year Interest Due (at an annual rate) --------------------------------------------- 1 through 10 5.25% --------------------------------------------- 11 and after 4.75% ---------------------------------------------
If you do not pay the interest when due, it will become part of the loan and accrue interest accordingly. To secure this "new" loan, we will deduct amounts from the Fund Value of each Subaccount and/or the Guaranteed Interest Account in the same proportion that each bears to total Fund Value on the policy anniversary. You may repay all or part of the Outstanding Debt (i.e., your loan amount plus interest on the loan) at any time by sending the repayment to our Operations Center. We will credit repayments on the Business Day that we receive them. You must clearly mark a repayment as a loan repayment or it will be credited as a premium. If a loan repayment is made which exceeds the Outstanding Debt, we will consider the excess to be part of a scheduled premium payment, and the payment will be subject to the rules on acceptance of premium payments. Upon each loan repayment, we will transfer an amount equal to the loan repayment from the Loan Account to the Variable Account and/or Guaranteed Interest Account according to your current premium allocation instructions. We deduct any Outstanding Debt from your Cash Value and the Death Benefit proceeds payable on the Insured's death. Effects of Policy Loans A loan affects the Policy because we reduce Death Benefit proceeds and Cash Value under the Policy by the amount of Outstanding Debt. Repaying the loan causes the Death Benefit proceeds and Fund Value to increase by the amount of the repayment. As long as there is Outstanding Debt, we will hold an amount in the Loan Account equal to the loan amount as collateral. This amount is not affected by the Variable Account's investment performance or interest we credit on amounts allocated to the Guaranteed Interest Account. Amounts transferred from the Variable Account as collateral will affect the Fund Value of your Policy because we credit such amounts with an interest rate we declare rather than a rate of return reflecting the investment performance of the Variable Account. There are risks involved in taking a loan, a few of which include the potential for your Policy to terminate if, after your third policy anniversary (or, in some instances, the third anniversary following an increase in Specified Amount), projected earnings taking into account Outstanding Debt are not achieved. A loan may have adverse tax consequences. See "Tax Considerations." We will notify you if your Policy is in risk of termination and has entered a 61-day grace period. See "Termination." TERMINATION General Your Policy will remain in effect as long as: 1.it has a Cash Value greater than zero; and 35 2.you make any required additional premium payments during the 61-day grace period. If your Policy does not meet the conditions specified above, it will be in default. In that case, we will mail you a notice of insufficient premium that will inform you of the premium you must pay to keep your Policy in effect. You must pay this premium amount within the 61-day grace period from the date we send notice to you. If you do not pay the required premium, your Policy will end. As discussed below, we have special rules relating to termination during the first three Policy Years and for three Policy Years following an increase in Specified Amount if that increase became effective during the first three Policy Years. Special Rules for First Three Policy Years During the first three Policy Years (or the first three Policy Years following an increase in Specified Amount during that period), we guarantee that your Policy will not lapse if, on each Monthly Anniversary Day, either: . Your Policy's Cash Value is greater than zero; or . The sum of the premiums paid minus all partial surrenders (excluding related fees), minus any Outstanding Debt, is greater than or equal to the Minimum Monthly Premium times the number of months your Policy has been in effect (or number of months from the most recent increase in Specified Amount). We refer to this as the minimum monthly premium test. Your Policy may be at risk of termination if: . The insufficiency occurs at after the first three Policy Years; or . The minimum monthly premium test has not been met during the first three Policy Years (as described above). Amounts You Must Pay to Keep Your Policy in Effect If you receive a notice of insufficient premium, you must pay the amount stated in the notice to keep your Policy in effect. In general, the amount you must pay will vary based on the Policy Year of your Policy. During the first three Policy Years (or within three years of an increase in Specified Amount during that period), you must pay: 1.any unpaid Minimum Monthly Premium; plus 2.one succeeding Minimum Monthly Premium. After the third policy anniversary (or after three years from the most recent increase in Specified Amount during that period), you must pay: 1.any unpaid Monthly Deduction; plus 2.an amount equal to two succeeding Monthly Deductions (plus the amount of the deductions from premiums for various taxes and the sales charge). Your Policy Will Remain in Effect During the Grace Period Your Policy will remain in effect through the grace period. This means that if the Insured should die during the grace period, a Death Benefit would still be payable, although we generally would reduce the Death Benefit 36 proceeds by the unpaid Monthly Deduction as well as the Monthly Deduction for the month of death and by the amount of any Outstanding Debt. If you do not pay the required premium before the grace period ends, your Policy will terminate. It will have no value and no benefits will be payable. However, you may reinstate your Policy within certain circumstances. Reinstatement If you have not surrendered your Policy and it is before the maturity date, you may reinstate your Policy within five years after the Monthly Anniversary Day that falls at the beginning of the grace period. To reinstate your Policy, you must provide us the following four items: 1.a written application received at our Operations Center within five years of the end of the grace period; 2.satisfactory evidence to us of the insurability of the Insured; 3.payment of a premium large enough to cover: a. the balance we told you in the notice of insufficient premium that was necessary to keep your Policy in effect; and b. an amount sufficient to keep your Policy in force for at least one month from the reinstatement date; and 4.payment or reinstatement of any Outstanding Debt you owe us on the Policy, plus payment of interest on any reinstated Debt from the beginning of the grace period to the end of the grace period at the rate which applies to policy loans on the date of reinstatement. For Policies issued after January 6, 2003, this is an annual rate of 5.25% for Policy Years 1-10 and 4.75% for Policy Years 11 and after. We will reinstate any surrender charge that would have been outstanding on the date of reinstatement had the Policy remained in force. Your Fund Value on the date of reinstatement will be based on the reinstated surrender charge, the net premium paid, the reinstated Outstanding Debt, and any Monthly Deduction due on the reinstatement date. Should we reinstate your Policy, your Policy will be reinstated on the Monthly Anniversary Day that falls on, or immediately precedes, the date we approved your application for reinstatement. At that time, we will allocate Fund Value minus Outstanding Debt (if applicable) among the Subaccounts and the Guaranteed Interest Account according to your most recent scheduled premium payment allocation instructions. PAYMENTS AND TELEPHONE TRANSACTIONS You may send your written request for payment or transfer request to our Operations Center or give it to one of our authorized agents. We will ordinarily pay any Death Benefit proceeds, loan proceeds or surrender or partial surrender proceeds in a lump sum within seven days after receipt at our Operations Center of all the documents required for such a payment. Other than the Death Benefit proceeds, which we determine as of the date the Insured's death, the amount we pay or transfer, as appropriate, is as of the end of the Business Day during which our Operations Center receives all required documents. We may pay your surrender proceeds or Death Benefit proceeds as a lump sum or under one of the settlement options available under the Policy. Contact our your agent or our Operations Center for more information regarding the settlement options. Any Death Benefit proceeds that we pay in one lump sum will include interest from the date of death to the date of payment. The interest we pay will be at a rate determined by the state where we delivered your Policy. 37 We may delay making a payment or processing a transfer request if: . the New York Stock Exchange is closed on other than customary weekend and holiday closing or trading on the New York Stock Exchange is restricted as determined by the SEC; . an emergency exists, as determined by the SEC, as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to determine the value of the Account's net assets; or . for such other periods as the SEC by order may permit. We may also defer making payments attributable to a check that has not cleared the bank on which it is drawn. We reserve the right to defer payments from the Guaranteed Interest Account for up to six months. If mandated under applicable law, we may be required to reject a premium payment. We may also be required to provide additional information about your account to government regulators. In addition, we may be required to block an Owner's account and thereby refuse to pay any request for transfers, withdrawals, surrenders, loans or death benefits, until instructions are received from the appropriate regulator. Telephone Transactions You may request a transfer of Fund Value or change allocation instructions for future premiums by telephone if you have completed and signed a telephone transfer authorization form, and we have received that form at our Operations Center. You may elect these privileges when you apply for the Policy. We may record all or part of any telephone conversation with respect to transfer and allocation instructions. We will process your telephone instructions as of the end of the Business Day that we receive them, subject to the limitations stated in this prospectus. We will only accept telephone transfer and allocation instructions if they are complete and correct. We have adopted guidelines (which we believe to be reasonable) relating to telephone transfers and allocation instructions. These guidelines, among other things, outline procedures to be followed which are designed to prevent unauthorized instructions. If these procedures are followed, we will not be liable for, and you will therefore bear the entire risk of, any loss as a result of our following telephone instructions if such instructions prove to be fraudulent. A copy of the guidelines and the Company's form for electing telephone transfer privileges is available from your agent or by calling 1-800-487-6669. Please note that our telephone system may not always be available. Any telephone system, whether it is yours, your service provider's, or your registered representative's, can experience unscheduled outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our system handle heavy use, we cannot promise complete reliability under all circumstances. If your are experiencing problems, you may make your transaction request by writing our Operations Center. CHARGES AND DEDUCTIONS We will deduct the charges described below to cover our costs and expenses, services provided, and risks assumed under the Policies. We incur certain costs and expenses for the distribution and administration of the Policies and for providing the benefits payable thereunder. Services and benefits we provide: . the Death Benefit, surrender benefit and loan benefit under the Policy; . investment options, including premium allocations; 38 . administration of elective benefits; and . the distribution of reports to Owners. Costs and expenses we incur: . processing applications for and issuing the Policies; . maintaining records; . administering settlement options; . furnishing accounting and valuation services (including the calculation and monitoring of daily Subaccount values); . reconciling and depositing cash receipts; . those associated with underwriting applications and increases in Specified Amount; . sales and marketing expense, including compensation paid in connection with the sales of the Policies; . providing toll-free inquiry services; . other costs of doing business, such as federal, state and local premium taxes and other taxes and fees. The risks we assume include: . that the Insured may live for a shorter period of time than estimated, resulting in the payment of greater Death Benefits than expected; and . that the costs of providing the services and benefits under the Policies will exceed the charges deducted. The amount of a charge may not necessarily correspond to the costs associated with providing the services or benefits indicated by the designation of the charge. For example, surrender charges we collect may not fully cover all of the sales and distribution expenses we actually incur. We also may realize a profit on one or more of the charges. We may use any such profits for any corporate purpose, including the payment of sales expenses. Deductions From Premium Payments We deduct a sales charge and a tax charge from each premium payment before we apply that payment to your Fund Value. The sales charge is a percentage of each premium paid and varies based on the total of the Specified Amount plus the Term Life Term Insurance Rider amount in effect. The amount of the sales charge is as follows:
------------------------------------------------------------------------------- Insurance Amount Policy Year ------------------------------------------------------------------------------- Specified Amount in force of less than $ 500,000 4% Policy Years 1-10 1% Policy Years 11 and later ------------------------------------------------------------------------------- Specified Amount in force of $500,000 or more 2% Policy Years 1-10 0.5% Policy Years 11 and later -------------------------------------------------------------------------------
We also deduct a tax charge for state and local premium taxes and for federal tax on deferred acquisition costs. The state and local premium tax charge is currently 0.8% of your premium payment (this corresponds to the premium tax charged in New York). The federal tax charge for deferred acquisition costs of the Company is currently 1.25% of your premium payment, and is used to cover our estimated cost for federal income tax 39 treatment of deferred acquisition costs. We will not deduct the federal tax deferred acquisition cost charge where the premiums received from you are not subject to this tax. We reserve the right to increase or decrease the charge for taxes due to any change in tax law or due to any change in the cost to us. Deductions from the Variable Account We deduct a daily maximum mortality and expense risk charge of 0.001781% from each Subaccount. This corresponds to a maximum annual rate of .65% of net assets. We do not assess this charge against assets in the Guaranteed Interest Account or in the Loan Account. The mortality and expense risk charge is part of the net investment factor calculation we make. See "How Your Fund Value Varies." The mortality and expense risk charge compensates us for assuming mortality and expense risks under the Policies. The mortality risk we assume is that Insureds, as a group, may live for a shorter period of time than estimated. Therefore, the cost of insurance charges specified in the Policy will not be enough to meet our actual claims. The expense risk we assume is that other expenses incurred in issuing and administering the Policies and operating the Variable Account will be greater than the amount estimated when setting the charges for these expenses. Deductions from Fund Value - The Monthly Deduction We take a Monthly Deduction from the Fund Value on the Policy Date and on each Monthly Anniversary Day. We will make the deduction by canceling Units in each Subaccount and withdrawing amounts from the Subaccount. We will take the Monthly Deduction on a pro-rata basis from the Subaccounts and the Guaranteed Interest Account (i.e., in the same proportion that the value in each Subaccount and the Guaranteed Interest Account bears to the sum of all Subaccounts and the Guaranteed Interest Account on the Monthly Anniversary Day). Because portions of the Monthly Deduction can vary from month-to-month, the Monthly Deduction will also vary. The Monthly Deduction equals: . the cost of insurance charge for the Policy; plus . the administrative charge; plus . the Per $1,000 Specified Amount charge; plus . the charges for any optional insurance benefits. Cost of Insurance. We assess a monthly cost of insurance charge to compensate us for insuring the Death Benefit (i.e., the anticipated cost of paying a death benefit that exceeds your Fund Value). Depending on a number of factors (such as gender, age, risk class, and policy duration), the cost of insurance charge may vary from Policy to Policy and from Monthly Anniversary Day to Monthly Anniversary Day. To determine your cost of insurance charge on a Monthly Anniversary Day, we multiply the cost of insurance rate at the Insured's attained age by the amount at risk and divide that amount by 1,000. The amount at risk depends in part on the Death Benefit Option that you selected and your Policy's Fund Value on the Monthly Anniversary Day. Other factors that affect the amount at risk include investment performance, payment of premiums, and charges to the policy. If you Elected death Benefit Option 1, your amount at risk on a Monthly Anniversary Day is the difference between 1 and 2 where: 1. is the Death Benefit that would have been payable in the event of the death of the Insured on that Monthly Anniversary Day divided by 1.003675; and 40 2. is the Fund Value on that Monthly Anniversary Day before we assess the Monthly Deduction. If you elected Death Benefit Option 2, your amount at risk on a Monthly Anniversary Day is equal to the sum of 1 and 2 where: 1. your Specified Amount in force; and 2. the excess between the Death Benefit payable on that Monthly Anniversary Day, less Fund Value on that Day, less the Specified Amount in force. The cost of insurance rate for the Insured is based on age, gender, and risk class. We currently place Insureds into the following risk classes when we issue the Policy: Preferred Nonsmoker, Preferred Smoker, Standard Nonsmoker, Standard Smoker, or Special Class. The original risk class applies to the initial Specified Amount. The cost of insurance rate generally increases with the age of the Insured. We calculate the insurance rate separately for the initial Specified Amount and for any increase in Specified Amount. A different risk class may apply to any increase, based on the Insured's circumstances at the time of the increase in Specified Amount. We may change the insurance rates from time to time at our sole discretion, but we guarantee that the insurance rates we charge will never exceed the maximum rates shown in your Policy. These rates are based on the 1980 Commissioners' Standard Ordinary Mortality Tables. The maximum insurance rates are based on the Insured's age last birthday at the start of the Policy Year. The rates we currently charge are, at most ages, lower than the maximum permitted under the Policies, and depend on our expectation of future experience with respect to investment earnings, mortality, expenses, persistency, and taxes. A change in rates will apply to all persons of the same age, gender (where applicable), and risk class and whose Policies have been in effect for the same length of time. Our insurance rates distinguish between women and men. We offer Policies based on unisex mortality tables if required by law. Administrative Charge. We deduct a $5.00 charge each month to compensate us for administrative expenses. Per $1,000 Specified Amount Charge. We deduct this charge during the first 10 Policy Years and for 10 Policy Years following an increase in Specified Amount. This charge is made per $1,000 of Specified Amount based on the Insured's age on the Policy Date (or date of the increase), gender, and smoking status. We show the maximum amount of these charges in the "Fee Table" section of this Prospectus. Optional Insurance Benefits Charge. We charge you each month for the optional insurance benefits you added to your Policy by rider. We state these charges in the Fee Table and your rider. We describe the charges for the Term Life Term Rider and the Purchase Option Rider. The charge for the Term Life Term Rider is deducted on the date the rider is issued and on each Monthly Anniversary Day. The charge for the Term Life Term Rider, which is based on the cost of insurance charges and on the Insured's age, sex, risk class and the number of years after the rider is issued, has a guaranteed maximum range of $0.08 to $10.45 per $1,000 of term insurance purchased. The guaranteed maximum charge for the Purchase Option Rider is deducted on the date the rider is issued and on each Monthly Anniversary Day until the Policy anniversary that follows the Insured's 49th birthday. This charge varies based on the Insured's age, and ranges from $0.05 to $0.36 per $1,000 of purchase option insurance. 41 Transaction Charges Surrender Charge. We assess a surrender charge against Fund Value upon a full surrender of the Policy to reimburse us for the costs of selling the Policies. We base the surrender charge on a factor per $1,000 of initial Specified Amount (or upon an increase in Specified Amount); this factor grades from 80% to zero over 15 years based on a schedule. The factors per $1,000 vary by issue age, gender, and risk class. The grading percentages (as shown below) vary based on issue age and number of full years since we issued the Policy (or since we increased the Specified Amount).
Applicable Applicable Applicable Applicable Percentage for Issue Percentage for Issue Percentage for Issue Percentage for Issue Policy Years Ages 0-38 Ages 39-62 Ages 63-75 Ages 76-85 ------------ -------------------- -------------------- -------------------- -------------------- 1 75% 75% 75% 80% 2 75 75 70 80 3 75 70 67 70 4 75 65 63 60 5 75 60 60 50 6 75 55 55 40 7 75 50 50 30 8 70 45 45 20 9 60 40 40 0 10 50 35 35 0 11 40 30 30 0 12 30 20 20 0 13 20 10 10 0 14 10 5 5 0 15+ 0 0 0 0
Example: If a male Insured age 35 purchases a Policy with a Specified Amount of $100,000, the per $1,000 of initial Specified Amount surrender charge factor would be $7.25 (Preferred, nonsmoker). The maximum surrender charge during the first seven Policy Years would be 75% of (100 x 7.25) or $543.75. The surrender charge per $1,000 of initial Specified Amount factor would be $64.00 based upon the assumptions described above and if the Policy were purchased by a male insured age 85, standard smoker. We do not assess a surrender charge for partial surrenders. We do, however, assess a partial surrender fee on each partial surrender. Partial Surrender Fee. We deduct a partial surrender fee of $10 on each partial surrender you make. We allocate the fee between your remaining Fund Value in the Subaccounts and in the Guaranteed Interest Account on a pro-rata basis, based on the allocation percentages you specified for the partial surrender. Transfer Charge. We reserve the right to assess a $25 transfer charge for each transfer you make after the 12th transfer in any Policy Year. Other Charges. We may charge the Subaccounts for federal income taxes that we incur and are attributable to the Variable Account. No such charge is currently assessed. TAX CONSIDERATIONS Introduction The following summary provides a general description of the federal income tax considerations associated with the policy and does not purport to be complete or to cover all tax situations. This discussion is not intended as tax 42 advice. Counsel or other competent tax advisors should be consulted for more complete information. This discussion is based upon our understanding of the present federal income tax laws. No representation is made as to the likelihood of continuation of the present federal income tax laws or as to how they may be interpreted by the Internal Revenue Service. Tax Status of the Policy In order to qualify as a life insurance contract for federal income tax purposes and to receive the tax treatment normally accorded life insurance contracts under federal tax law, a policy must satisfy certain requirements which are set forth in the Internal Revenue Code. Guidance as to how these requirements are to be applied is limited. Nevertheless, we believe that the policy should satisfy the applicable requirements. There is insufficient guidance with respect to policies issued on a rated basis and policies with term riders added and it is not clear whether such policies will in all cases satisfy the applicable requirements. If it is subsequently determined that a policy does not satisfy the applicable requirements, we may take appropriate steps to bring the policy into compliance with such requirements and we reserve the right to restrict policy transactions in order to do so. In certain circumstances, owners of variable life insurance contracts could be considered for federal income tax purposes to be the owners of the assets of the variable account supporting their contracts due to their ability to exercise investment control over those assets. Where this is the case, the contract owners can be currently taxed on income and gains attributable to the variable account assets. There is little guidance in this area, and some features of the policies, such as the flexibility of a policy owner to allocate premiums and cash values, have not been sufficiently addressed in published rulings. While we believe that the policies do not give policy owners investment control over MONY America Variable Account L assets, we reserve the right to modify the policies as necessary to help prevent a policy owner from being treated as the owner of the Variable Account assets supporting the policy. In addition, the Code requires that the investments of MONY America Variable Account L be "adequately diversified" in order for the policies to be treated as life insurance contracts for federal income tax purposes. It is intended that the Variable Account, through the Funds, will satisfy these diversification requirements. The following discussion assumes that the policy will qualify as a life insurance contract for federal income tax purposes. Tax Treatment of Policy Benefits In General. We believe that the death benefit under a policy should be excludible from the gross income of the beneficiary. Federal, state and local transfer, and other tax consequences of ownership or receipt of policy proceeds depend on the circumstances of each policy owner or beneficiary. A tax advisor should be consulted on these consequences. Generally, the policy owner will not be deemed to be in actual or constructive receipt of the policy cash value until there is a distribution. When distributions from a policy occur, or when loans are taken out from or secured by a policy, the tax consequences depend on whether the policy is classified as a "Modified Endowment Contract." Modified Endowment Contracts. Under the Internal Revenue Code, certain life insurance contracts are classified as "Modified Endowment Contracts," with less favorable tax treatment than other life insurance contracts. Due to the flexibility of the policies as to premiums and benefits, the individual circumstances of each policy will determine whether it is classified as a Modified Endowment Contract. The rules are too complex to be summarized here, but "Modified Endowment Contract" status generally depends on the amount of premiums paid during the first seven policy years. Certain changes in a policy after it is issued could also cause it to be classified as a Modified Endowment Contract. A current or prospective policy owner should consult with a competent advisor to determine whether a policy transaction will cause the policy to be classified as a Modified Endowment Contract. 43 Distributions Other Than Death Benefits from Modified Endowment Contracts. Policies classified as Modified Endowment Contracts are subject to the following tax rules: 1)All distributions other than death benefits, including distributions upon surrender and withdrawals, from a Modified Endowment Contract will be treated first as distributions of gain taxable as ordinary income and then as tax-free recovery of the policy owner's investment in the policy only after all gain in the Policy has been distributed. 2)Loans taken from or secured by a policy classified as a Modified Endowment Contract are treated as distributions and taxed accordingly. 3)A 10 percent additional penalty tax is imposed on the amount subject to tax except where the distribution or loan is made when the policy owner has attained age 59 1/2 or is disabled, or where the distribution is part of a series of substantially equal periodic payments for the life (or life expectancy) of the policy owner or the joint lives (or joint life expectancies) of the policy owner and the policy owner's beneficiary or designated beneficiary. A corporate or other non-natural person owner will not meet any of these exceptions. If a policy becomes a modified endowment contract, distributions that occur during the contract year will be taxed as distributions from a modified endowment contract. In addition, distributions from a policy within two years before it becomes a modified endowment contract may be taxed in this manner. This means that a distribution made from a policy that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. Distributions Other Than Death Benefits from Policies that are not Modified Endowment Contracts. Distributions other than death benefits from a policy that is not classified as a Modified Endowment Contract are generally treated first as a recovery of the policy owner's investment in the policy and only after the recovery of all investment in the policy as taxable income. However, certain distributions which must be made in order to enable the policy to continue to qualify as a life insurance contract for federal income tax purposes if policy benefits are reduced during the first 15 Policy years may be treated in whole or in part as ordinary income subject to tax. Loans from or secured by a policy that is not a Modified Endowment Contract are generally not treated as distributions. However, the tax consequences associated with loans after the tenth policy year are less clear and a tax adviser should be consulted about such loans. Finally, neither distributions from nor loans from or secured by a policy that is not a Modified Endowment Contract are subject to the 10 percent additional penalty tax. Investment in the Policy. Your investment in the policy is generally your aggregate premiums. When a distribution is taken from the policy, your investment in the policy is reduced by the amount of the distribution that is tax-free. Policy Loans. In general, interest on a policy loan will not be deductible. If a policy loan is outstanding when a policy is canceled or lapses, the amount of the Outstanding Debt will be added to the amount distributed and will be taxed accordingly. Before taking out a policy loan, you should consult a tax adviser as to the tax consequences. Multiple Policies. All Modified Endowment Contracts that are issued by us (or our affiliates) to the same policy owner during any calendar year can be treated as one Modified Endowment Contract for purposes of determining the amount includible in the policy owner's income when a taxable distribution occurs. 44 45 Withholding. To the extent that policy distributions are taxable, they are generally subject to withholding for the recipient's federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions. Continuation of Policy Beyond Age 100. The tax consequences of continuing the policy beyond the insured's 100th year are unclear. You should consult a tax adviser if you intend to keep the policy in force beyond the insured's 100th year. Pension and Profit Sharing Plans. A life insurance policy can be purchased and held by a qualified retirement plan subject to limitations of federal tax law and the terms of the retirement plan. As the rules governing qualified retirement plans are voluminous and complex and as their effect may differ depending on the terms of a particular plan document no attempt is made here to describe such rules. Persons purchasing the policy pursuant to a qualified retirement plan should consult with their own tax advisors. Business Uses of Policy. Businesses can use the policies in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances. If you are purchasing the policy for any arrangement the value of which depends in part on its tax consequences, you should consult a qualified tax adviser. In recent years, moreover, Congress has adopted new rules relating to life insurance owned by businesses. Any business contemplating the purchase of a new policy or a change in an existing policy should consult a tax adviser. Split-Dollar Arrangements. The IRS and the Treasury Department have recently issued guidance that substantially affects split-dollar arrangements. Consult a qualified tax adviser before entering into or paying additional premiums with respect to such arrangements. Alternative Minimum Tax. There may also be an indirect tax upon the income in the Policy or the proceeds of a Policy under the federal corporate alternative minimum tax, if the Owner is subject to that tax. Other Tax Considerations. The transfer of the policy or designation of a beneficiary may have federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate, and generation-skipping transfer taxes. For example, the transfer of the policy to, or the designation as a beneficiary of, or the payment of proceeds to, a person who is assigned to a generation which is two or more generations below the generation assignment of the owner may have generation-skipping transfer tax consequences under federal tax law. The individual situation of each owner or beneficiary will determine the extent, if any, to which federal, state, and local transfer and inheritance taxes may be imposed and how ownership or receipt of policy proceeds will be treated for purposes of federal, state and local estate, inheritance, generation-skipping and other taxes. Possible Tax Law Changes. Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the policy could change by legislation or otherwise. Consult a tax adviser with respect to legislative developments and their effect on the policy. Our Income Taxes Currently we do not deduct a charge from the Variable Account for federal income taxes. We reserve the right to charge MONY Variable Account L for any future federal income taxes we may incur. Under current laws, we may incur state and local taxes (in addition to premium taxes). These taxes are not now significant and we are not currently charging for them. If they increase, we may deduct charges for such taxes. OTHER POLICY INFORMATION Exchange Privilege During the first 24 months following the Policy Date, you may exchange your Policy for a policy where the investment experience is guaranteed. To accomplish this, the entire amount in the Subaccounts of the Variable Account is transferred to the Guaranteed Interest Account. All future premiums are allocated to the Guaranteed Interest Account. This serves as an exchange of your Policy for the equivalent of a flexible premium universal life policy. No charge is imposed on the transfer when you exercise the exchange privilege. Paid-Up Insurance You may change to guaranteed paid-up insurance on a Policy anniversary. At that time, the Specified Amount will be reduced to an amount that the Cash Value will maintain in effect until the maturity date when applied as a net single premium. However, the maximum amount of Cash Value applied will not be greater than necessary to provide an amount at risk equal to the amount at risk immediately before this option becomes effective. We will refund to you any Cash Value in excess of the amount we applied. Assignment You may assign any interest in your Policy to another person. You must send written notice of the assignment to us at our Operations Center. The assignment will take effect once we have recorded the assignment. We may rely solely on the statement of the assignee as to the amount of his or her interest. All assignments will be subject to Outstanding Debt. Please see your Policy for more information. Settlement Options We offer several settlement options as alternatives to the payment of Death Benefit proceeds or Cash Value in a lump sum. In selecting a settlement option: (1) the proceeds applied must be at least $1,000; and (2) the payee cannot be a corporation, association, or fiduciary. We will make payments under a settlement option monthly unless you or the payee request that we make the payments quarterly, semiannually or annually. If payments of the chosen frequency would be less than $25 each, we may use a less frequent payment basis. You, while the Insured is living, or your payee (not more than one month after the proceeds become payable) may select a settlement option by writing us at our Operations Center. Please see your Policy for more information about the settlement options. Misstatement of Age or Sex If you misstated the Insured's age or sex in your application, we will adjust the Death Benefit proceeds. Suicide Exclusion If the Insured dies by suicide, while sane or insane, within two years from the Policy Date or reinstatement date, we will limit the Death Benefit proceeds to the premium payments less any partial surrender amounts (and their fees) and any Outstanding Debt. If an Insured dies by suicide, while sane or insane, within two years of the effective date of any increase in the Specified Amount, the amount payable with respect to that increase will be limited to the cost of insurance charges you paid with respect to such increase. Incontestability The Policy limits our right to contest the Policy as issued or as increased, except for material misstatements contained in the application or a supplemental application, after it has been in force during the Insured's lifetime for a minimum period, generally for two years from the Policy Date, or effective date of the increase in Specified Amount. 46 Other Changes to Your Policy At any time, we may make such changes in the Policy as are necessary: . to assure compliance at all times with the definition of life insurance prescribed by the Internal Revenue Code; . to make the Policy, our operations, or the operation of the Variable Account conform with any law or regulation issued by any government agency to which they are subject; or . to reflect a change in the operation of the Variable Account, if allowed by the Policy. Only one of our executive officers has the right to change the Policy. No agent has the authority to change the Policy or waive any of its terms. An executive officer of the Company must sign all endorsements, amendments, or riders to be valid. ADDITIONAL INFORMATION Sale of the Policies We have entered into a distribution agreement with MONY Securities Corporation ("MSC"), a wholly owned subsidiary of MONY Life Insurance Company, to act as principal underwriter and for the distribution and sale of the Policies. MSC is registered as a broker dealer under the Securities Exchange Commission under the Securities Exchange Act of 1934, as well as with the securities commissions in the states in which it operates, and is a member of the National Association of Securities Dealers, Inc. ("NASD"). The Policies are sold by individuals who are registered representatives of MSC and who are also licensed as life insurance agents for the Company. The Policies may also be sold through other broker-dealers authorized by MSC and applicable law to do so. MSC offers the Policies through its registered representatives who are registered with the NASD and with the states in which they do business. More information about MSC and its registered persons is available at http://www.nasdr.com or by calling 1-800-289-9999. You also can obtain an investor brochure from NASD Regulation describing its Public Disclosure Program. Compensation payable to MSC's sales representatives for the sale of the Policies will be based upon the following schedule. After issue of the Policy, commissions will equal at most 50% of premiums paid up to a maximum amount. Thereafter, commissions will equal at most 3.8% of any additional premiums plus, beginning in the second Policy Year on each succeeding quarterly anniversary for so long as the policy shall remain in effect, an annualized rate of 0.25% of the Fund Value of the Policy. Upon any subsequent increase in Specified Amount, commissions will equal at most 50% of premiums paid on or after the increase up to a maximum amount. Thereafter, commissions will return to no more than the 3.8% level. Further, registered representatives may be eligible to receive certain bonuses and other benefits based on the amount of earned commissions. In addition, registered representatives who meet specified production levels may qualify, under sales incentive programs adopted by the Company, to receive non-cash compensation such as expense-paid trips, expense-paid educational seminars and merchandise. The Company makes no separate deductions, other than previously described, from premiums to pay sales commissions or sales expenses. MSC will receive 12b-1 fees from certain of the Funds as compensation for providing certain distribution and shareholder support services. MSC may enter into selling agreements with other broker dealers that are members of the NASD and whose representatives are authorized by applicable law to sell variable life insurance policies. Commissions paid to 47 these broker dealers for their representatives will not exceed the commissions described above. The selling agreement does not restrict these broker dealers from retaining a portion of commissions. We intend to recapture commissions and other sales expenses through fees and charges imposed under the Policy. Commissions paid on the Policy, including other incentives or payments, are not charged directly to the Policy owners or the Variable Account. Other Information We filed a registration statement with the SEC under the Securities Act of 1933, as amended, for the Policies being offered here. This prospectus does not include all of the information set forth in the registration statement (including the Statement of Additional Information), its amendments, and exhibits. Statements in this prospectus about the content of the Policies and other legal instruments are summaries. For the complete text of those Policies and instruments, please refer to those documents as filed with the SEC. You may obtain these documents from the SEC's principal office in Washington, D.C., upon payment of the SEC's prescribed fees, or by assessing the SEC's website at http//www.sec.gov. Legal Proceedings The Company, like all other companies, is involved in lawsuits, including class action lawsuits. In some class action and other lawsuits involving insurance companies, substantial damages have been sought and/or material settlement payments have been made. Although the outcome of any litigation cannot be predicted with certainty, we believe that at the present time there are no pending or threatened lawsuits that are reasonably likely to have a material adverse impact on us or the Variable Account. POLICY ILLUSTRATIONS Upon request, the Company will send you an illustration of future benefits under the Policy based on both guaranteed and current cost assumptions. You should obtain a personalized illustration before purchasing a Policy. PERFORMANCE INFORMATION We may advertise the performance of the MONY Variable Account L Subaccounts. We will also report performance to Owners and may make performance information available to prospective purchasers. In addition, we may advertise performance of the underlying portfolios of the corresponding MONY Variable Account L Subaccounts. Performance information may show the change in an Owner's Fund Value in one or more Subaccounts, or as a change in an Owner's death benefit. Performance information may be expressed as a change in an Owner's Fund Value over time or in terms of the average annual compounded rate of return on the Owner's Fund Value. Such performance is based upon a hypothetical policy in which premiums have been allocated to a particular Subaccount over certain periods of time that will include one, five and ten years, or from the commencement of operation of the Subaccount if less than one, five, or ten years. Any such quotation may reflect the deduction of all applicable charges to the Policy including premium load, the cost of insurance, the administrative charge, and the mortality and expense risk charge. The quotation may also reflect the deduction of the surrender charge, if applicable, by assuming surrender at the end of the particular period. However, other quotations may simultaneously be given that do not assume surrender and do not take into account any deduction of charges imposed by the Policy. 48 Performance information for the Variable Account may be compared in advertisements, sales literature, and reports to Owners to: 1.Other variable life separate accounts or investment products tracked by research firms, ratings services, companies, publications, or persons who rank separate accounts or investment products on overall performance or other criteria, and 2.The Consumer Price Index (measure for inflation) to assess the real rate of return from the purchase of a policy. Reports and promotional literature may also contain the Company's rating or a rating of the Company's claim paying ability as determined by firms that analyze and rate insurance companies and by nationally recognized statistical rating organizations. Performance information for any Subaccount reflects only the performance of a hypothetical Policy whose Cash Value is allocated to the Variable Account during a particular time period on which the calculations are based. Performance information should be considered in light of the investment objectives and policies, characteristics and quality of the portfolios of the Funds in which MONY Variable Account L invests. The market conditions during the given period of time should not be considered as a representation of what may be achieved in the future. We may also use non-standard performance in cases where we add new Subaccounts which purchase shares of underlying Funds in existence prior to the formation of such Subaccounts. In such cases we will use the historical performance of the Fund with the current expenses of the applicable Subaccount under the Policy. FINANCIAL STATEMENTS Our financial statements and the financial statements of the Variable Account are contained in the SAI. You should distinguish the financial statements of the Company included in this prospectus from the financial statements of the Variable Account. The financial statements of the Company should be considered only as bearing upon the ability of the Company to meet its obligations under the Policies. You should not consider the financial statements of the Company as affecting the investment performance of the assets held in the Variable Account. 49 GLOSSARY For your convenience, we are providing a glossary of the special terms we use in this prospectus. Beneficiary - the person or entity you designate to receive the death benefit payable at the death of the Insured. Business Day - is any day the New York Stock Exchange is open for regular trading or on any other day there is enough trading to change the Unit value of the Subaccount. Our Business Day ends at 4:00 pm Eastern time. Cash Value - the Fund Value of the Policy less any surrender charge and any Outstanding Debt. Fund - any open-end management investment company in which the Variable Account invests. Fund Value - the total amount under the Policy in each Subaccount, the Guaranteed Interest Account, and the Loan Account. General Account - assets of the Company other than those allocated to the Variable Account or any of our other separate accounts. Guaranteed Interest Account - is a fixed account that is part of our General Account. Insured - the person on whose life we base this Policy. Loan Account - an account to which we transfer amounts from the Subaccounts of the Variable Account and the Guaranteed Interest Account to use as collateral for any Policy loan that you request. The Loan Account is part of the Company's General Account. Maturity Age - the policy anniversary following the Insured's 100th birthday. The maturity date is the date the Policy reaches the Maturity Age. Monthly Anniversary Day - the first Business Day of each policy month. Monthly Deduction - a deduction we take on each Monthly Anniversary Day that consists of the cost of insurance charge, any additional benefit charges, an administrative charge, and a per $1,000 Specified Amount charge. Operations Center - the Company's service center at One MONY Plaza, P.O. Box 4720, Syracuse, New York 13221. The telephone number of the Operations Center is 1-800-487-6669. Outstanding Debt - the unpaid balance of any loan which you request on the Policy. The unpaid balance includes accrued loan interest which is due and has not been paid by you. Owner - the owner of the Policy. "You" or "your" refers to the Owner. Policy - the Policy with any attached application(s), any riders, and any endorsements. Policy Date - the date we authorize the Policy to be delivered to you (we call this the "policy release date") or, if later, the date as you requested your Policy to become effective. We measure Policy Years and anniversaries from the Policy Date. The Policy Date is shown in your Policy. If the Policy Date is the 29th, 30th, or 31st of a month, there will be some calendar months when there is no such date. For those months, the policy month will start on the last day of the calendar month. 50 Specified Amount - the minimum death benefit for as long as the Policy remains in effect. Subaccount - a subdivision of the Variable Account that invests exclusively in shares of a Fund. Unit - the measure of value in a Subaccount. Variable Account - MONY Variable Account L, a segregated asset account of the Company into which you allocate premiums and transfer Fund Value. 51 STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS ADDITIONAL INFORMATION ABOUT THE COMPANY............. 1 Mony Variable Account L............................. 1 ADDITIONAL POLICY INFORMATION........................ 1 The Policy.......................................... 1 Paid-Up Insurance................................... 1 Dividends........................................... 2 Beneficiary......................................... 2 The Portfolios...................................... 2 Settlement Options.................................. 3 Sale Of The Policies................................ 4 ADDITIONAL INFORMATION............................... 5 Legal Developments Regarding Unisex Actuarial Tables 5 Reports............................................. 5 Records............................................. 6 Legal Matters....................................... 6 Experts............................................. 6 PERFORMANCE DATA..................................... 6 FINANCIAL STATEMENTS................................. 8
52 [Outside Back Cover Page] To learn more about us, the Policy (including more information concerning compensation paid for the sale of the Policy) and the Variable Account, you should read the Statement of Additional Information ("SAI") dated the same date as this prospectus. The Table of Contents for the SAI is on the last page of this Prospectus. For a free copy of the SAI, please contact your agent, call us toll-free at 1-800-487-6669, or write us at our Operations Center. You may also contact your agent, call us toll-free, or write us at our Operations Center if you wish to receive personalized illustrations of your Policy's Death Benefits, Cash Values and Fund Values, and to request other information about your Policy. The SAI has been filed with the SEC and is incorporated by reference into this Prospectus and is legally a part of this Prospectus. You may review and copy information about us and the Policy (including the SAI) at the SEC's Public Reference Room in Washington, DC, or you may obtain information upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, DC 20549-0102 or by accessing the SEC's website at http://www.sec.gov. Additional information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 942-8090. Investment Company Act of 1940 Registration File No. 811-06215. MONY VARIABLE ACCOUNT L STATEMENT OF ADDITIONAL INFORMATION For THE VARIABLE UNIVERSAL LIFE INSURANCE POLICY Issued by MONY Life Insurance Company 1740 Broadway New York, NY 10019 Operations Center: One MONY Plaza P.O. Box 4720 Syracuse, NY 13221 (800) 487-6669 This Statement of Additional Information ("SAI") contains additional information regarding the individual flexible premium variable life insurance policy (the "Policy") offered by MONY Life Insurance Company ("we," "us," "our," or the "Company"). Capitalized terms in this SAI have the same meanings as in the prospectus for the Policy. This SAI is not a prospectus, and should be read together with the prospectus for the Policy dated May 1, 2003 and the prospectuses for The Alger American Fund, Enterprise Accumulation Trust, INVESCO Variable Investment Funds, Inc., Janus Aspen Series, Lord Abbett Series Fund, MFS(R) Variable Insurance Trust/SM/, MONY Series Fund, Inc., PBHG Insurance Series Fund, PIMCO Variable Insurance Trust, and The Universal Institutional Funds, Inc. You may obtain a copy of these prospectuses by writing or calling us at our Operations Center shown above. The date of this Statement of Additional Information is May 1, 2003. STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS ADDITIONAL INFORMATION ABOUT THE COMPANY............. 1 MONY Variable Account L............................. 1 ADDITIONAL POLICY INFORMATION........................ 1 The Policy.......................................... 1 Paid-up Insurance................................... 1 Dividends........................................... 2 Beneficiary......................................... 2 The Portfolios...................................... 2 Settlement Options.................................. 3 Sale of the Policies................................ 4 ADDITIONAL INFORMATION............................... 5 Legal Developments Regarding Unisex Actuarial Tables 5 Reports............................................. 5 Records............................................. 6 Legal Matters....................................... 6 Experts............................................. 6 FINANCIAL STATEMENTS................................. 6
ADDITIONAL INFORMATION ABOUT THE COMPANY MONY Life Insurance Company issues the Policies. We are currently licensed to sell life insurance and annuities in all 50 states of the United States, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico. The Company was founded in 1842 as The Mutual Life Insurance Company of New York. In 1998, The Mutual Life Insurance Company of New York converted to a stock company through demutualization and was renamed MONY Life Insurance Company. The demutualization did not have any material effect on the obligations of the Company under the policies or on MONY Variable Account L. MONY Securities Corporation, a wholly owned subsidiary of the Company, is the principal underwriter for the Policies. We are subject to regulation by the state of New York and regulation by the Superintendent of Insurance in New York. We file an annual statement with the state of New York, and periodically, the Superintendent of Insurance for the State of New York assesses our liabilities and reserves and those of the Variable Account and assesses their adequacy. We are also subject to the insurance laws and regulations of other states in which we are licensed to operate. MONY VARIABLE ACCOUNT L The Variable Account is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"), and meets the definition of a separate account under the federal securities laws. Registration with the SEC does not involve supervision of the management of investment practices or policies by the SEC. ADDITIONAL POLICY INFORMATION THE POLICY The Policy, any attached riders and/or endorsements, the application and any supplemental applications make up the entire contract. Only statements made in the applications can be used to void the Policy or to deny a claim. We assume that all statements in an application are made to the best of the knowledge and belief of the person(s) who made them, and, in the absence of fraud, those statements are considered representations and not warranties. We rely on those statements when we issue or change a Policy. PAID-UP INSURANCE On any policy anniversary, you may change to guaranteed paid-up insurance. At the time of the change, we will reduce the Policy's Specified Amount to an amount that the Policy's Cash Value will keep in effect until the maturity date when applied as a single net premium. The maximum amount of Cash Value that we will apply will not be any greater than needed to provide an amount at risk that is equal to the amount at risk immediately prior to this option becoming effective. You will be refunded any Cash Value in excess of the amount we applied. You can discuss with your agent to learn more about this option. The net single premium rates will be based on: (a) the 1980 CSO mortality tables at the Insured's gender and attained age and class of risk on the later of the policy date and the most recent increase in coverage under the policy; and (b) 4.5% interest. On and after the effective date, the Cash Value of the paid-up coverage will equal the present value of future guaranteed benefits based on the net single premium rates described above without regard to any loans. To obtain paid-up insurance, we must receive a written request 30 days before the policy anniversary date on which it becomes effective. The endorsement issued to reflect the change to paid-up insurance will show the SAI-1 reduced Specified Amount and the guaranteed Cash Value on the effective date and each policy anniversary thereafter. Once the paid-up insurance option is effective the following conditions apply: 1.It may not be revoked. 2.The Company will not accept any further premium. 3.No further optional policy changes may be made. 4.The Policy is no longer subject to the administrative charge and the per $1,000 Specified Amount charge. 5.Any surrender charge, loan balance and loan interest which existed immediately before the effective date will be set to zero. 6.Any partial surrender will result in a recalculation of the Specified Amount and Cash Value. 7.Any additional benefits provided by rider will terminate. The Death Benefit will equal the reduced Specified Amount. DIVIDENDS This Policy is non-participating. We do not pay dividends on the Policy. BENEFICIARY You name the Beneficiary when you apply for the Policy. You may designate if the Beneficiary has to be living or surviving at the Insured's death. If you so designate, then, unless otherwise provided, that Beneficiary must be living on the 14th day after the Insured's death or, if earlier, the date we receive due proof of the Insured's death. The share of the Death Benefit proceeds of any Beneficiary who is not living on the earlier day will be payable to remaining Beneficiaries. Unless provided in the Beneficiary designation, if there is no Beneficiary named or living on the date of the Insured's death, we will pay the Death Benefit proceeds to the Insured's executors or administrators. You may change the Beneficiary, unless you have given up this right, as long as the Insured is living by writing us at our Operations Center. The change will take effect when we record it retroactively as of the date the request was signed. The change will be subject to any payment we made before we received notice of the change of Beneficiary at our Operations Center. THE PORTFOLIOS We will purchase shares of the portfolios at net asset value and direct them to the corresponding Subaccount. We will redeem sufficient shares of the appropriate portfolios at net asset value to pay surrender/partial surrender proceeds or other purposes described in your Policy. In general, we will automatically reinvest all dividends and capital gains distributions received from a portfolio in shares of the distributing portfolio at net asset value on the date of distribution. In other words, we do not pay portfolio dividends or portfolio distributions out to Owners as additional Units, but instead reflect them in Unit values. We may elect not to reinvest dividends and capital gains distributions. Shares of Fund portfolios are not sold directly to the general public. They are offered to insurance company separate accounts to support variable annuity and variable life insurance contracts and to qualified plans. SAI-2 When shares are sold to both variable life and variable annuity separate accounts, this is called "mixed funding." When shares are sold to insurance companies that are not affiliated with each other, this is called "shared funding." Currently, we do not foresee any disadvantages to Owners due to mixed or shared funding. However, differences in tax treatment or other considerations may at some time create conflict of interests between owners of various contracts. The Company and the Boards of Directors of the Funds, and any other insurance companies that participate in the Funds are required to monitor events to identify material conflicts. If there is a conflict because of mixed or shared funding, a company might be required to withdraw the investment of one or more of its separate accounts from the Funds. This might force the Funds to sell securities at disadvantageous prices. See the prospectuses for the Funds. SETTLEMENT OPTIONS We offer the following settlement options as alternatives to the payment of Death Benefit proceeds or Cash Value in a lump sum: Option 1. Interest Income - Under this option, we hold the proceeds and credit the interest earned on those proceeds to the payee. We set the rate of interest for each year, but that rate will never be less than 2 3/4% a year. This Option will continue until the earlier of the date the payee dies or the date you elect another settlement option. Option 2. Income for Specified Period - Under this option, the payee receives an income for the number of years chosen. We then calculate an income that will be based on the Minimum Monthly Income Table 2 for that period. Note that the longer the period selected (i.e., number of years) the lower the dollar amount per $1,000 of proceeds. Payments may be increased by additional interest as we may determine for each year. Option 3. Single Life Income - Under this option, a number of years called the period certain is chosen. We will then pay income to a single payee for as long as that payee lives or for the number of years chosen (the period certain), whichever is longer. If the payee dies after the end of the period certain, the income payments will stop. The period certain elected may be: (a) 0, 10, or 20 years; or (b) until the total income payments equal the proceeds applied (this is called a refund period certain). We will calculate the amount of the income payments on the date the proceeds become payable. This amount will be at least as much as the applicable amount shown in the Minimum Monthly Income Table 3 shown in your Policy. The income amounts are based on the 1983 Table "a" (discrete functions, without projections for future mortality) with a 3 1/2% interest. If the income payments for the period certain elected are the same as income payments based on another available longer period certain, we will deem an election to have been made for the longer period certain. Option 3A. Joint Life Income - We pay income during the joint lifetime of two people (the payee and another person). That means if one person dies, we will continue to pay the same income (or a lesser income) to the survivor for as long as the survivor lives. The survivor may receive the same dollar amount that we were paying before the first payee died or two-thirds of that amount depending on the election made at the time of settlement. Note that if the lesser (two-thirds) amount paid to the survivor is elected, the dollar amount payable while both persons are living will be larger than it would have been if the same amount paid to the survivor had been elected. We will calculate the amount of income payable while both persons are living (the joint lifetime) on the date the proceeds become payable. This amount will be at least as much as the applicable amount shown in the Minimum Monthly Income Table 3A shown in your Policy. The minimum income amounts are based on the 1983 Table "a" (discrete functions, without projections for future mortality) with 3 1/2% interest. SAI-3 If a person for whom Option 3A is chosen dies before the first income amount is payable, the survivor will receive settlement instead under Option 3 with 10 years certain. Option 4. Income of Specified Amount - Under this option, the dollar amount of the income payments is chosen. We will pay that amount for as long as the proceeds and interest last but, the dollar amount chosen must add up to a yearly amount of at least 10% of the proceeds applied. Interest will be credited annually on the balance of the proceeds. We set the rate of interest for each year, but that rate will never be less than 2 3/4% a year. We also may pay proceeds under any other option to which we and the payee may agree. SALE OF THE POLICIES MSC is the principal underwriter for the Policies. MSC may enter into selling agreements with other broker dealers that are members of the NASD and whose representatives are authorized by law to sell variable life insurance policies. Commissions paid to these broker dealers for their representatives will not exceed the commissions described in the Prospectus. MSC may pay additional compensation from its own resources to broker dealers based on the level of Policy sales or premium payments. MSC also acts as principal underwriter for other variable products and distributes non-proprietary variable products and mutual funds. We offer the Policies on a continuous basis. We anticipate continuing to offer the Policies, but reserve the right to discontinue the offering. MSC receives fees for the sale of the Policies. MSC received compensation with respect to the Policies offered through the Variable Account in the following amounts during the periods indicated:
--------------------------------------------------------------------------- Aggregate Amount of Commissions Retained by MSC After Payments to its Fiscal Aggregate Amount of Registered Persons and Other Year Commissions Paid to MSC* Broker-Dealers --------------------------------------------------------------------------- 2000 $17,611,642 N/A --------------------------------------------------------------------------- 2001 $16,870,424 N/A --------------------------------------------------------------------------- 2002 $14,206,789 N/A ---------------------------------------------------------------------------
* Includes sales compensation paid to registered persons of MSC. MSC passes through commissions it receives and does not retain any override as distributor for the Policies. However, under the distribution agreement with MSC, we pay the following sales expenses: sales representative training allowances; deferred compensation and insurance benefits of registered persons; advertising expenses; and all other expenses of distributing the Policies. We also pay for MSC's operating and other expenses as it relates to the Policies. Because sales representatives of MSC are also insurance agents of the Company, they are eligible for various cash benefits, such as bonuses, insurance benefits and financing arrangements, and non-cash compensation programs that the Company offers. These programs include conferences, seminars, meals, sporting events, theater performances, payment for travel, lodging and entertainment, prizes, and awards, subject to applicable regulatory requirements. Sales of the Policies may help sales representatives qualify for such benefits. Sales representatives may receive other payments from the Company for services that do not directly involve the sale of the Policies, including payments made for the recruitment and training of personnel, production of SAI-4 promotional literature, and similar services. In addition, MSC sales representatives who meet certain Company productivity, persistency and length of service standards may be eligible for additional compensation. We may pay certain broker-dealers an additional bonus after the first Policy year for sales by their sales representatives, which may be up to the amount of the basic commission for the particular Policy year. These broker-dealers may share the bonus or other additional compensation with their sales representatives. In addition, we may reimburse these broker-dealers for portions of their Policy sales expenses. Certain Funds have adopted a distribution plan in connection with its 12b-1 shares and pay MSC for its costs in distributing these shares, all or some of which may be passed on to a selling broker-dealer that has entered into a selling agreement with MSC. Each distribution plan has been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, which allows funds to pay fees to those who sell and distribute fund shares out of fund assets. The 12b-1 fees are in consideration of distribution services and expenses incurred in the performance of MSC's obligations under an agreement with that Fund. Under the distribution plans up to % is paid to MSC for its distribution-related services and expenses under this agreement. The advisers for certain Funds may, from time to time use their management fee revenue, as well as their past profits or their other resources as may be permitted by regulatory rules, to make payments for distribution services to MSC, which may in turn pay part or all of such compensation to a broker-dealer of record with whom it has entered into a selling agreement. Sales charges deducted from premium payments, as well as Proceeds from the contingent deferred sales charge on the Policies are retained by us and used to defray the expenses we incur in paying for distribution-related services under the distribution agreement, such as the payment of commissions. Commissions paid on the Policy, including other incentives or payments, are not charged directly to the Policy Owners or the Variable Account. From time to time the Company, in conjunction with MSC, may conduct special sales programs. ADDITIONAL INFORMATION LEGAL DEVELOPMENTS REGARDING UNISEX ACTUARIAL TABLES In 1983, the United States Supreme Court held in Arizona Governing Committee v. Norris that optional annuity benefits provided under an employee's deferred compensation plan could not, under Title VII of the Civil Rights Act of 1964, vary between men and women on the basis of sex. In that case, the Supreme Court applied its decision only to benefits derived from contributions made on or after August 1, 1983. Subsequent decisions of lower federal courts indicate that, in other factual circumstances, the Title VII prohibition of sex-distinct benefits may apply at an earlier date. In addition, legislative, regulatory, or decisional authority of some states may prohibit the use of sex-distinct mortality tables under certain circumstances. The Policies, other than Policies issued in states which require "unisex" policies (currently Montana), are based upon actuarial tables which distinguish between men and women and, thus, the Policy provides different benefits to men and women of the same age. Accordingly, employers and employee organizations should consider, in consultation with legal counsel, the impact of these authorities on any employment-related insurance or benefits program before purchasing the Policy. REPORTS We will send you a report at least annually showing the then current status of your Policy. It will set forth: since the last report date: \/ premiums received; \/ expense charges (including transfer charges, if any); SAI-5 \/ cost of insurance and any riders; \/ interest earned on Fund Value in the Loan Account and in the Guaranteed Interest Account; and \/ any partial surrenders (and their fees). as of the current report date: \/ Death Benefit; \/ Specified Amount; and \/ Outstanding Debt. as of the current and prior report dates: \/ Fund Value; \/ Subaccount Unit values; \/ Fund Value in the Guaranteed Interest Account; and \/ any other information required by law. We also will send you an annual and a semi-annual report for each Fund in which you are investing, as required by the 1940 Act. RECORDS We will maintain all records relating to the Variable Account and the Guaranteed Interest Account at our Operations Center. LEGAL MATTERS Legal matters in connection with the Policy have been passed on by Arthur D. Woods, Vice President--Variable Products and Broker-Dealer Operations Counsel of MONY Life Insurance Company. Robert Levy, Vice President--Chief Tax Counsel of MONY Life Insurance Company has passed upon legal matters relating to the federal income tax laws. EXPERTS The Financial Statements have been included in this SAI, which is a part of the registration statement, in reliance on the reports of PricewaterhouseCoopers LLP, independent accountants, given on the authority of that firm as experts in accounting and auditing. Actuarial matters included in the prospectus and/or SAI have been examined by Pamela Duffy, Vice President of MONY Life Insurance Company, as stated in her opinion filed as an exhibit to the Registration Statement. PERFORMANCE DATA The returns for the portfolios in which the Subaccounts invest for the periods indicated are shown in the tables below. The returns reflect the actual investment performance of the underlying portfolios after reinvestment of dividends and capital gains, and deductions of investment management fees and other portfolio operating expenses. Returns do not include deductions at the Variable Account and Policy level for state premium tax, federal deferred SAI-6 acquisition cost tax, sales charge, cost of insurance charges and cost of any riders, administrative charge, mortality and expense risk charges, Per $1,000 of Specified Amount Charge, surrender or other charges that may be incurred under a Policy. If these charges were reflected, the returns would be significantly lower. The performance given represents past performance and should not be considered indicative of future results. Money Market Portfolio. The performance data for this Portfolio will reflect the "yield" and "effective yield". The "yield" of the Portfolio refers to the income generated by an investment in the Portfolio over the seven day period stated in the advertisement. This income is "annualized", that is, the amount of income generated by the investment during that week is assumed to be generated each week over a 52-week period and is shown as a percentage of the investment. The "effective yield" is calculated similarly, but, when annualized, the income earned by an investment in the Portfolio is assumed to be reinvested. The "effective yield" will be slightly higher than the "yield" because of the compounding effect of this assumed reinvestment. The yield is calculated by dividing the sum of the dividends declared during the seven-day period on one share purchased at the beginning of the seven-day period by the value on the first day (the resulting quotient being the "Base Period Return") and multiplying the Base Period Return by 365 divided by seven to obtain the annualized yield. The effective yield is calculated by compounding the Base Period Return calculated above, adding 1 to the Base Period Return, and raising that sum to a power equal to 365 divided by 7, and subtracting 1 from the result. MONY MONEY MARKET PORTFOLIO For the seven-day period ended December 31, 2002, the yield was 1.17% and the effective yield was 1.18%. Investments made to the MONY Money Market Portfolio are not issued or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. There is no guarantee that the net asset value of $1.00 per share can be maintained by the Portfolio. All Other Portfolios. A Portfolio's yield is computed by dividing the net investment income per share earned during the specific one-month or 30-day period by the offering price per share on the last day of the period. Yield For 30-Day Period
Lord PIMCO MONY MONY Janus Aspen Abbett PIMCO PIMCO StocksPLUS Government Long Term Series Bond- Global Real Growth and Yield for 30 Days Ended Securities Bond Flexible Income Debenture Bond Return Income ----------------------- ---------- --------- --------------- --------- ------ ------ ---------- December 31, 2002 0.93% 3.53% 4.38% 6.17% 1.96% 4.42% 2.41%
Total Return Calculations Average Annual Total Return. A Portfolio's average annual total return quotation is computed in accordance with a method prescribed by SEC rules. The average annual total return for a Portfolio for a specified period is determined by assuming a hypothetical $1,000 investment in the Portfolio's shares on the first day of the period at the then effective net asset value per share ("initial investment"), and computing the ending redeemable value ("redeemable value") of that investment at the end of the period. The redeemable value is then divided by the initial investment, and this quotient is taken to the nth root (n representing the number of years in the period) and 1 is subtracted from the result, which is then expressed as a percentage. The calculation assumes that all income and capital gain dividends by the Portfolio have been reinvested at net asset value on the reinvestment dates during the period. Total Return. A Portfolio's total return for a specific period is calculated by first taking an investment (assumed to be $1,000) in the Portfolio's shares on the first day of the period at the then effective net asset value per share SAI-7 ("initial investment") and computing the ending value ("ending value") of that investment at the end of the period. The total return percentage is then determined by subtracting the initial investment from the ending value and dividing the difference by the initial investment and expressing the result as a percentage. This calculation assumes that all income and capital gain dividends by the Portfolio have been reinvested at net asset value on the reinvestment dates during the period. Total return may also be shown as the increased dollar value of the hypothetical investment over the period. As of December 31, 2002
Average Annual Total Returns ------------------------------------------ Portfolio Cumulative Since Inception Total Portfolio Portfolio Name Date Return 1 Year 3 Years 5 Years 10 Years Inception -------------------------------------------------------------------------------------------------------- Alger American Balanced................ 09/05/1989 -12.29% -12.29% -5.78% 7.28% 9.55% 8.92% Alger American MidCap Growth........... 05/03/1993 -29.54% -29.54% -10.41% 4.32% N/A 12.55% Enterprise Equity Income............... 12/01/1998 -14.76% -14.76% -6.79% N/A N/A -3.31% Enterprise Global Socially Responsive.. 01/24/2002 -13.98% N/A N/A N/A N/A -13.98% Enterprise Growth...................... 12/01/1998 -23.26% -23.26% -14.79% N/A N/A -4.98% Enterprise Growth & Income............. 12/01/1998 -25.95% -25.95% -13.00% N/A N/A -4.99% Enterprise Managed..................... 08/01/1988 -21.20% -21.20% -10.77% -3.48% 7.91% 11.73% Enterprise Multi-Cap Growth............ 07/15/1999 -34.64% -34.64% -27.77% N/A N/A 2.86% Enterprise Small Company Growth........ 12/01/1998 -24.02% -24.02% -9.35% N/A N/A 5.95% Enterprise Small Company Value......... 08/01/1988 -9.25% -9.25% -0.70% 5.89% 11.11% 12.72% Enterprise Total Return................ 01/24/2002 7.09% N/A N/A N/A N/A 7.09% INVESCO VIF Financial Services......... 09/21/1999 -14.90% -14.90% -1.45% N/A N/A 1.86% INVESCO VIF Health Sciences............ 05/22/1997 -24.45% -24.45% -4.83% 5.25% N/A 6.53% INVESCO VIF Telecommunications......... 09/21/1999 -50.81% -50.81% -44.93% N/A N/A -32.56% Janus Aspen Series Capital Appreciation 05/01/1997 -15.85% -15.85% -18.05% 7.55% N/A 11.10% Janus Aspen Series Flexible Income..... 09/13/1993 9.70% 9.70% 7.65% 6.45% N/A 7.79% Janus Aspen Series International Growth 05/02/1994 -25.62% -25.62% -20.66% 1.14% N/A 7.98% Lord Abbett Bond-Debenture............. 12/03/2001 7.92% 7.92% N/A N/A N/A 7.64% Lord Abbett Growth and Income.......... 12/11/1989 -18.03% -18.03% -3.98% 3.13% 10.28% 11.24% Lord Abbett Mid-Cap Value.............. 09/15/1999 -9.78% -9.78% 14.11% N/A N/A 12.32% MFS Mid Cap Growth..................... 05/01/2000 -43.20% -43.20% N/A N/A N/A -25.42% MFS New Discovery...................... 05/01/1998 -31.63% -31.63% -13.98% N/A N/A 2.61% MFS Total Return....................... 01/03/1995 -5.17% -5.17% 3.32% 5.01% N/A 10.72% MFS Utilities.......................... 01/03/1995 -22.76% -22.76% -14.42% -0.65% N/A 9.22% MONY Government Securities............. 05/01/1991 6.57% 6.57% 7.61% 6.03% 5.79% 6.40% MONY Long Term Bond.................... 03/20/1985 14.06% 14.06% 11.91% 7.35% 8.44% 10.04% MONY Money Market...................... 07/29/1985 1.50% 1.50% 3.78% 4.31% 4.42% 5.18% PBHG Mid-Cap Value..................... 11/30/1998 -18.66% -18.66% 4.10% N/A N/A 11.74% PBHG Select Value...................... 10/28/1997 -25.07% -25.07% -3.50% 6.18% N/A 6.83% PIMCO Global Bond...................... 01/11/2002 20.35% N/A N/A N/A N/A 20.35% PIMCO Real Return...................... 09/30/1999 17.77% 17.77% 13.79% N/A N/A 12.63% PIMCO StocksPLUS Growth and Income..... 12/31/1997 -20.22% -20.22% -13.85% -0.06% N/A -0.06% Van Kampen UIF Emerging Markets Equity. 10/01/1996 -8.90% -8.90% -19.70% -5.13% N/A -4.40% Van Kampen UIF Global Value Equity..... 01/02/1997 -16.87% -16.87% -4.85% 0.35% N/A 3.39% Van Kampen UIF US Real Estate.......... 03/03/1997 -0.79% -0.79% 12.10% 4.35% N/A 6.70%
FINANCIAL STATEMENTS This SAI contains the audited statements of assets and liabilities of the Variable Account as of December 31, 2002 and the related statements of operations and statements of changes in net assets for each of the three years in the period then ended. The SAI also contains the financial statements of MONY Life Insurance Company. PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York, 10036, serves as independent accountants for the Variable Account and the Company. SAI-8 FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS
Page ----- With respect to MONY Variable Account L (Corporate Sponsored VUL - NY) No financial statements are included because although MONY Variable Account L commenced operations in 1990, the subaccount available to policyholders had not commenced operations as of December 31, 2002 With respect to MONY Variable Account L (MONY Variable Universal Life) Report of Independent Accountants..................................................................................... F-2 Statement of assets and liabilities as of December 31, 2002........................................................... F-3 Statement of operations for the period ended December 31, 2002........................................................ F-8 Statement of changes in net assets for the period ended December 31, 2002............................................. F-14 Notes to financial Statements......................................................................................... F-20 With respect to MONY Variable Account L (MONY Survivorship Variable Universal Life) Report of Independent Accountants..................................................................................... F-25 Statement of assets and liabilities as of December 31, 2002........................................................... F-27 Statement of operations for the period ended December 31, 2002........................................................ F-32 Statement of changes in net assets for the period ended December 31, 2002............................................. F-38 Notes to financial Statements......................................................................................... F-43 With respect to MONY Variable Account L (MONY Custom Equity Master) Report of Independent Accountants..................................................................................... F-49 Statement of assets and liabilities as of December 31, 2002........................................................... F-50 Statement of operations for the period ended December 31, 2002........................................................ F-56 Statement of changes in net assets for the years ended December 31, 2002 and December 31, 2001........................ F-62 Notes to financial Statements......................................................................................... F-72 With respect to MONY Variable Account L (MONY Custom Estate Master) Report of Independent Accountants..................................................................................... F-79 Statement of assets and liabilities as of December 31, 2002........................................................... F-80 Statement of operations for the period ended December 31, 2002........................................................ F-86 Statement of changes in net assets for the years ended December 31, 2002 and December 31, 2001........................ F-92 Notes to financial Statements......................................................................................... F-102 With respect to MONY Variable Account L (Strategist and MONYEquity Master) Report of Independent Accountants..................................................................................... F-107 Statement of assets and liabilities as of December 31, 2002........................................................... F-108 Statement of operations for the year ended December 31, 2002.......................................................... F-114 Statement of changes in net assets for the years ended December 31, 2002 and December 31, 2001........................ F-120 Notes to financial Statements......................................................................................... F-130 With respect to MONY Variable Account L (Combined) Report of Independent Accountants..................................................................................... F-137 Combined statement of assets and liabilities as of December 31, 2002.................................................. F-138 Combined statement of operations for the year ended December 31, 2002................................................. F-139 Combined statement of changes in net assets for the years ended December 31, 2002 and December 31, 2001............... F-140 Notes to Combined Financial Statements................................................................................ F-141 With respect to MONY Life Insurance Company Report of Independent Accountants..................................................................................... F-145 Balance sheets as of December 31, 2002 and 2001....................................................................... F-146 Statements of income and comprehensive income for the years ended December 31, 2002, 2001 and 2000.................... F-147 Statements of changes in shareholder's equity for the years ended December 31, 2002, 2001 and 2000.................... F-148 Statements of cash flows for the years ended December 31, 2002, 2001 and 2000......................................... F-149 Notes to financial statements......................................................................................... F-150
F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of MONY Life Insurance Company and the Contractholders of MONY Variable Account L - MONY Variable Universal Life In our opinion, the accompanying statements of assets and liabilities 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 each of the MONY Variable Universal Life's Subaccounts of MONY Variable Account L at December 31, 2002, and the results of each of their operations, the changes in each of their net assets and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "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 of America, 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 investments at December 31, 2002 by correspondence with the underlying funds' transfer agents, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York April 8, 2003 F-2 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES December 31, 2002
MONY Variable Universal Life ---------------------------------------------------------------- Alger American Fund Enterprise Accumulation Trust -------------------- ------------------------------------------ Global MidCap Equity Growth and Socially Balanced Growth Income Income Growth Responsive Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------- ---------- ---------- ---------- ---------- ASSETS Shares held in respective Funds....................... 2,428 3,261 5,416 16,449 27,514 1,406 ======= ======= ======= ======= ======== ======= Investments at cost........... $27,729 $48,473 $25,894 $73,276 $122,191 $13,847 ======= ======= ======= ======= ======== ======= Investments in respective Funds, at net asset value... $27,417 $40,595 $22,855 $64,973 $109,506 $12,052 Amount due from MONY.......... 110 14 0 825 134 0 Amount due from respective Funds....................... 4 2 24 14 23 1 ------- ------- ------- ------- -------- ------- Total assets........... 27,531 40,611 22,879 65,812 109,663 12,053 ------- ------- ------- ------- -------- ------- LIABILITIES Amount due to MONY............ 17 26 37 50 80 8 Amount due to respective Funds 110 14 0 825 134 0 ------- ------- ------- ------- -------- ------- Total liabilities...... 127 40 37 875 214 8 ------- ------- ------- ------- -------- ------- Net assets.................... $27,404 $40,571 $22,842 $64,937 $109,449 $12,045 ======= ======= ======= ======= ======== ======= Net assets consist of: Contractholders' net payments................... $28,039 $49,893 $26,296 $75,578 $123,802 $14,527 Undistributed net investment income (loss)... 20 (155) 167 445 (21) (14) Accumulated net realized (loss) on investments...... (343) (1,289) (582) (2,783) (1,647) (673) Net unrealized (depreciation) of investments................ (312) (7,878) (3,039) (8,303) (12,685) (1,795) ------- ------- ------- ------- -------- ------- Net assets.................... $27,404 $40,571 $22,842 $64,937 $109,449 $12,045 ======= ======= ======= ======= ======== ======= Number of units outstanding*.. 3,008 5,358 2,679 8,201 13,686 1,385 ------- ------- ------- ------- -------- ------- Net asset value per unit outstanding*................ $ 9.11 $ 7.57 $ 8.53 $ 7.92 $ 8.00 $ 8.70 ======= ======= ======= ======= ======== =======
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-3 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONY Variable Universal Life ------------------------------------------------------ Enterprise Accumulation Trust ------------------------------------------------------ Small Small Multi-Cap Company Company Total Managed Growth Growth Value Return Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------- ---------- ---------- ---------- ASSETS Shares held in respective Funds........................... 832 4,422 8,710 5,666 3,599 ======= ======= ======= ======== ======= Investments at cost....................................... $13,261 $29,951 $60,868 $103,169 $36,186 ======= ======= ======= ======== ======= Investments in respective Funds, at net asset value....... $12,711 $24,367 $52,086 $ 97,227 $36,673 Amount due from MONY...................................... 0 5 0 0 949 Amount due from respective Funds.......................... 8 8 15 17 3 ------- ------- ------- -------- ------- Total assets....................................... 12,719 24,380 52,101 97,244 37,625 ------- ------- ------- -------- ------- LIABILITIES Amount due to MONY........................................ 15 21 45 68 22 Amount due to respective Funds............................ 0 5 0 0 949 ------- ------- ------- -------- ------- Total liabilities.................................. 15 26 45 68 971 ------- ------- ------- -------- ------- Net assets................................................ $12,704 $24,354 $52,056 $ 97,176 $36,654 ======= ======= ======= ======== ======= Net assets consist of: Contractholders' net payments............................ $13,592 $30,914 $62,328 $102,813 $35,066 Undistributed net investment income (loss)............... 50 (90) (196) 1,913 1,014 Accumulated net realized gain (loss) on investments...... (388) (886) (1,294) (1,608) 87 Net unrealized appreciation (depreciation) of investments (550) (5,584) (8,782) (5,942) 487 ------- ------- ------- -------- ------- Net assets................................................ $12,704 $24,354 $52,056 $ 97,176 $36,654 ======= ======= ======= ======== ======= Number of units outstanding*.............................. 1,521 3,463 6,471 10,407 3,459 ------- ------- ------- -------- ------- Net asset value per unit outstanding*..................... $ 8.35 $ 7.03 $ 8.05 $ 9.34 $ 10.60 ======= ======= ======= ======== =======
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-4
MONY Variable Universal Life -------------------------------------------------------------------------------------------------------------- INVESCO Variable Investment Fund Janus Aspen Series Lord Abbett Series Fund --------------------------------------- ------------------------------------ ------------------------------- Growth Financial Health Capital Flexible International Bond and Mid-Cap Services Sciences Telecommunications Appreciation Income Growth Debenture Income Value Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------- ------------------ ------------ ---------- ------------- ---------- ---------- ---------- 768 1,454 2,636 1,034 2,143 3,009 2,044 3,325 1,984 ====== ======= ======= ======= ======= ======== ======= ======= ======= $8,748 $21,427 $ 9,564 $19,442 $26,661 $ 62,656 $21,303 $66,980 $28,180 ====== ======= ======= ======= ======= ======== ======= ======= ======= $8,062 $19,997 $ 7,223 $17,819 $27,474 $ 51,693 $21,624 $62,611 $27,500 0 0 5 73 0 10 0 187 6 11 10 8 25 3 5 1 2 2 ------ ------- ------- ------- ------- -------- ------- ------- ------- 8,073 20,007 7,236 17,917 27,477 51,708 21,625 62,800 27,508 ------ ------- ------- ------- ------- -------- ------- ------- ------- 16 21 12 35 18 34 13 38 15 0 0 5 73 0 10 0 187 6 ------ ------- ------- ------- ------- -------- ------- ------- ------- 16 21 17 108 18 44 13 225 21 ------ ------- ------- ------- ------- -------- ------- ------- ------- $8,057 $19,986 $ 7,219 $17,809 $27,459 $ 51,664 $21,612 $62,575 $27,487 ====== ======= ======= ======= ======= ======== ======= ======= ======= $8,795 $21,578 $10,910 $19,575 $25,980 $ 63,377 $20,876 $67,216 $28,295 29 (53) (41) (18) 539 106 404 193 76 (81) (109) (1,309) (125) 127 (856) 11 (465) (204) (686) (1,430) (2,341) (1,623) 813 (10,963) 321 (4,369) (680) ------ ------- ------- ------- ------- -------- ------- ------- ------- $8,057 $19,986 $ 7,219 $17,809 $27,459 $ 51,664 $21,612 $62,575 $27,487 ====== ======= ======= ======= ======= ======== ======= ======= ======= 925 2,467 1,132 1,990 2,536 6,455 2,017 7,720 3,087 ------ ------- ------- ------- ------- -------- ------- ------- ------- $ 8.71 $ 8.10 $ 6.38 $ 8.95 $ 10.83 $ 8.00 $ 10.71 $ 8.11 $ 8.90 ====== ======= ======= ======= ======= ======== ======= ======= =======
F-5 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONY Variable Universal Life ---------------------------------------------------------------------------- MFS Variable Insurance Trust MONY Series Fund, Inc. ------------------------------------------ -------------------------------- Mid Cap New Total Government Long Term Money Growth Discovery Return Utilities Securities Bond Market Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------- ---------- ---------- ---------- ---------- ---------- ASSETS Shares held in respective Funds....................... 6,221 2,479 3,707 698 8,259 3,212 791,559 ======= ======= ======= ====== ======= ======= ======== Investments at cost........... $33,598 $31,253 $63,128 $8,733 $94,801 $43,143 $791,559 ======= ======= ======= ====== ======= ======= ======== Investments in respective Funds, at net asset value... $28,055 $25,882 $63,546 $8,400 $97,621 $46,664 $791,559 Amount due from MONY.......... 10 0 33 10 947 163 8,359 Amount due from respective Funds....................... 9 13 16 11 23 9 86 ------- ------- ------- ------ ------- ------- -------- Total assets........... 28,074 25,895 63,595 8,421 98,591 46,836 800,004 ------- ------- ------- ------ ------- ------- -------- LIABILITIES Amount due to MONY............ 24 28 51 15 74 34 517 Amount due to respective Funds 10 0 33 10 947 163 8,359 ------- ------- ------- ------ ------- ------- -------- Total liabilities...... 34 28 84 25 1,021 197 8,876 ------- ------- ------- ------ ------- ------- -------- Net assets.................... $28,040 $25,867 $63,511 $8,396 $97,570 $46,639 $791,128 ======= ======= ======= ====== ======= ======= ======== Net assets consist of: Contractholders' net payments................... $35,394 $31,717 $63,509 $8,731 $94,459 $42,739 $789,294 Undistributed net investment income (loss)... (92) (98) 62 46 (242) (138) 1,834 Accumulated net realized gain (loss) on investments. (1,719) (381) (478) (48) 533 517 0 Net unrealized appreciation (depreciation) of investments................ (5,543) (5,371) 418 (333) 2,820 3,521 0 ------- ------- ------- ------ ------- ------- -------- Net assets.................... $28,040 $25,867 $63,511 $8,396 $97,570 $46,639 $791,128 ======= ======= ======= ====== ======= ======= ======== Number of units outstanding*.. 4,315 3,522 6,621 967 9,287 4,206 78,518 ------- ------- ------- ------ ------- ------- -------- Net asset value per unit outstanding*................ $ 6.50 $ 7.35 $ 9.59 $ 8.68 $ 10.51 $ 11.09 $ 10.08 ======= ======= ======= ====== ======= ======= ========
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-6
MONY Variable Universal Life --------------------------------------------------------------------------------------------------------- PBHG Insurance Series The Universal Institutional Funds, Inc. Funds PIMCO Variable Insurance Trust -------------------------------------- -------------------- ------------------------------- Emerging Global StocksPlus Markets Value U.S. Real Mid-Cap Select Global Real Growth and Equity Equity Estate Value Value Bond Return Income Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Total ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 2,920 388 3,426 5,832 1,372 2,611 4,888 16,105 ======= ====== ======= ======= ======= ======= ======= ======== $20,715 $4,172 $41,694 $66,674 $17,628 $27,790 $56,231 $132,489 $2,253,414 ======= ====== ======= ======= ======= ======= ======= ======== ========== $17,637 $3,819 $38,819 $63,570 $16,464 $30,519 $58,171 $116,761 $2,151,952 0 0 101 6 163 54 248 181 12,593 13 0 10 13 10 9 9 37 454 ------- ------ ------- ------- ------- ------- ------- -------- ---------- 17,650 3,819 38,930 63,589 16,637 30,582 58,428 116,979 2,164,999 ------- ------ ------- ------- ------- ------- ------- -------- ---------- 23 2 29 49 19 24 37 104 1,621 0 0 101 6 163 54 248 181 12,593 ------- ------ ------- ------- ------- ------- ------- -------- ---------- 23 2 130 55 182 78 285 285 14,214 ------- ------ ------- ------- ------- ------- ------- -------- ---------- $17,627 $3,817 $38,800 $63,534 $16,455 $30,504 $58,143 $116,694 $2,150,785 ======= ====== ======= ======= ======= ======= ======= ======== ========== $20,939 $4,198 $40,321 $70,300 $17,849 $27,245 $54,312 $133,486 $2,263,943 (79) 72 1,698 (216) 72 391 969 1,835 10,482 (155) (100) (344) (3,446) (302) 139 922 (2,899) (22,178) (3,078) (353) (2,875) (3,104) (1,164) 2,729 1,940 (15,728) (101,462) ------- ------ ------- ------- ------- ------- ------- -------- ---------- $17,627 $3,817 $38,800 $63,534 $16,455 $30,504 $58,143 $116,694 $2,150,785 ======= ====== ======= ======= ======= ======= ======= ======== ========== 2,063 462 4,010 7,346 2,063 2,562 5,050 14,127 ------- ------ ------- ------- ------- ------- ------- -------- $ 8.54 $ 8.27 $ 9.68 $ 8.65 $ 7.98 $ 11.90 $ 11.51 $ 8.26 ======= ====== ======= ======= ======= ======= ======= ========
F-7 MONY Variable Account L STATEMENT OF OPERATIONS
MONY Variable Universal Life ---------------------------------------------------------------------------- Alger American Fund Enterprise Accumulation Trust ------------------------ -------------------------------------------------- Global Mid Cap Equity Growth and Socially Balanced Growth Income Income Growth Responsive Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------ ------------ ------------ ------------ ------------ For the For the For the For the For the For the period period period period period period February 21, February 26, February 15, February 8, February 8, February 8, 2002** 2002** 2002** 2002** 2002** 2002** through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------ ------------ ------------ ------------ Dividend income............... $ 87 $ 0 $ 255 $ 657 $ 305 $ 45 Distribution from net realized gains.............. 0 0 0 0 0 0 Mortality and expense risk charges..................... (67) (155) (88) (212) (326) (59) ----- ------- ------- -------- -------- ------- Net investment income (loss).. 20 (155) 167 445 (21) (14) ----- ------- ------- -------- -------- ------- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ (343) (1,289) (582) (2,783) (1,647) (673) Net change in unrealized appreciation (depreciation) of investments................ (312) (7,878) (3,039) (8,303) (12,685) (1,795) ----- ------- ------- -------- -------- ------- Net realized and unrealized gain (loss) on investments.. (655) (9,167) (3,621) (11,086) (14,332) (2,468) ----- ------- ------- -------- -------- ------- Net increase (decrease) in net assets resulting from operations.................. $(635) $(9,322) $(3,454) $(10,641) $(14,353) $(2,482) ===== ======= ======= ======== ======== =======
---------- ** Commencement of operations See notes to financial statements. F-8
MONY Variable Universal Life ------------------------------------------------------------------------------------------------------------ Enterprise Accumulation Trust INVESCO Variable Investment Funds --------------------------------------------------------------- ------------------------------------------- Small Small Multi-Cap Company Company Financial Health Managed Growth Growth Value Total Return Services Sciences Telecommunications Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------ ------------ ------------ ------------ ------------ ------------ ------------------ For the For the For the For the For the For the For the For the period period period period period period period period February 22, February 15, February 8, February 8, March 5, February 8, February 8, February 15, 2002** 2002** 2002** 2002** 2002** 2002** 2002** 2002** through through through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------------ $ 85 $ 0 $ 0 $ 252 $ 580 $ 53 $ 0 $ 0 0 0 0 1,904 541 0 0 0 (35) (90) (196) (243) (107) (24) (53) (41) ----- ------- -------- ------- ------ ----- ------- ------- 50 (90) (196) 1,913 1,014 29 (53) (41) ----- ------- -------- ------- ------ ----- ------- ------- (388) (886) (1,294) (1,608) 87 (81) (109) (1,309) (550) (5,584) (8,782) (5,942) 487 (686) (1,430) (2,341) ----- ------- -------- ------- ------ ----- ------- ------- (938) (6,470) (10,076) (7,550) 574 (767) (1,539) (3,650) ----- ------- -------- ------- ------ ----- ------- ------- $(888) $(6,560) $(10,272) $(5,637) $1,588 $(738) $(1,592) $(3,691) ===== ======= ======== ======= ====== ===== ======= =======
F-9 MONY Variable Account L STATEMENT OF OPERATIONS (continued)
MONY Variable Universal Life - ----------------------------------------------------------------------------- Janus Aspen Series Lord Abbett Series Fund -------------------------------------- ------------------------------------- Capital Flexible International Bond Growth and Mid-Cap Appreciation Income Growth Debenture Income Value Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------ ------------- ------------ ------------ ------------ For the For the For the For the For the For the period period period period period period February 22, February 21, February 21, February 21, February 27, March 1, 2002** 2002** 2002** 2002** 2002** 2002** through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------- ------------ ------------ ------------ Dividend income............... $ 41 $ 621 $ 324 $423 $ 366 $ 133 Distribution from net realized gains.............. 0 0 0 50 8 0 Mortality and expense risk charges..................... (59) (82) (218) (69) (181) (57) ------- ------ -------- ---- ------- ----- Net investment income (loss).. (18) 539 106 404 193 76 ------- ------ -------- ---- ------- ----- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ (125) 127 (856) 11 (465) (204) Net change in unrealized appreciation (depreciation) of investments................ (1,623) 813 (10,963) 321 (4,369) (680) ------- ------ -------- ---- ------- ----- Net realized and unrealized gain (loss) on investments.. (1,748) 940 (11,819) 332 (4,834) (884) ------- ------ -------- ---- ------- ----- Net increase (decrease) in net assets resulting from operations.................. $(1,766) $1,479 $(11,713) $736 $(4,641) $(808) ======= ====== ======== ==== ======= =====
---------- ** Commencement of operations See notes to financial statements. F-10
MONY Variable Universal Life ----------------------------------------------------------------------------------------- MFS Variable Insurance Trust MONY Series Fund, Inc. -------------------------------------------------- ------------------------------------- Mid Cap New Government Long Term Money Growth Discovery Total Return Utilities Securities Bond Market Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------ ------------ ------------ ------------ ------------ ------------ For the For the For the For the For the For the For the period period period period period period period February 15, February 15, February 8, February 15, February 21, February 22, February 6, 2002** 2002** 2002** 2002** 2002** 2002** 2002** through through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 0 $ 0 $ 121 $ 72 $ 53 $ 11 $ 3,388 0 0 96 0 0 0 0 (92) (98) (155) (26) (295) (149) (1,554) ------- ------- ----- ----- ------ ------ ------- (92). (98) 62 46 (242) (138) 1,834 ------- ------- ----- ----- ------ ------ ------- (1,719) (381) (478) (48) 533 517 0 (5,543) (5,371) 418 (333) 2,820 3,521 0 ------- ------- ----- ----- ------ ------ ------- (7,262) (5,752) (60) (381) 3,353 4,038 0 ------- ------- ----- ----- ------ ------ ------- $(7,354) $(5,850) $ 2 $(335) $3,111 $3,900 $ 1,834 ======= ======= ===== ===== ====== ====== =======
F-11 MONY Variable Account L STATEMENT OF OPERATIONS (continued)
MONY Variable Universal Life --------------------------------------------------------------------------- PBHG Insurance Series The Universal Institutional Funds, Inc. Funds -------------------------------------------------------- ------------------ Emerging Markets Global U.S. Real Mid-Cap Equity Value Equity Estate Value Subaccount Subaccount Subaccount Subaccount ------------------- ------------------- ----------------- ------------------ For the period For the period For the period For the period February 15, 2002** February 28, 2002** February 26, 2002 February 8, 2002** through through through through December 31, December 31, December 31, December 31, 2002 2002 2002 2002 ------------------- ------------------- ----------------- ------------------ Dividend income............... $ 0 $ 38 $ 1,105 $ 0 Distribution from net realized gains.............. 0 44 695 0 Mortality and expense risk charges..................... (79) (10) (102) (216) ------- ----- ------- ------- Net investment income (loss).. (79) 72 1,698 (216) ------- ----- ------- ------- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ (155) (100) (344) (3,446) Net change in unrealized appreciation (depreciation) of investments................ (3,078) (353) (2,875) (3,104) ------- ----- ------- ------- Net realized and unrealized gain (loss) on investments.. (3,233) (453) (3,219) (6,550) ------- ----- ------- ------- Net increase (decrease) in net assets resulting from operations.................. $(3,312) $(381) $(1,521) $(6,766) ======= ===== ======= =======
** Commencement of operations See notes to financial statements. F-12
MONY Variable Universal Life ------------------------------------------------------------------------------------------------- PBHG Insurance Series Funds PIMCO Variable Insurance Trust --------------------------- ------------------------------------------------------ Global StocksPlus Select Value Bond Real Return Growth and Income Subaccount Subaccount Subaccount Subaccount Total ------- ------------------- --------------- ------------------- -------------- For the period For the period For the period For the period February 8, 2002** February 22, 2002** March 1, 2002** February 22, 2002** For the period through through through through ended December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 ------------------ ------------------- --------------- ------------------- -------------- $ 111 $ 371 $1,020 $ 2,273 $ 12,790 0 110 97 0 3,545 (39) (90) (148) (438) (5,853) ------- ------ ------ -------- --------- 72 391 969 1,835 10,482 ------- ------ ------ -------- --------- (302) 139 922 (2,899) (22,178) (1,164) 2,729 1,940 (15,728) (101,462) ------- ------ ------ -------- --------- (1,466) 2,868 2,862 (18,627) (123,640) ------- ------ ------ -------- --------- $(1,394) $3,259 $3,831 $(16,792) $(113,158) ======= ====== ====== ======== =========
F-13 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS
MONY Variable Universal Life ---------------------------------------------------------------------------- Alger American Fund Enterprise Accumulation Trust ------------------------ -------------------------------------------------- Global Mid Cap Equity Growth and Socially Balanced Growth Income Income Growth Responsive Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------ ------------ ------------ ------------ ------------ For the For the For the For the For the For the period period period period period period February 21, February 26, February 15, February 8, February 8, February 8, 2002** 2002** 2002** 2002** 2002** 2002** through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------ ------------ ------------ ------------ From operations: Net investment income (loss).. $ 20 $ (155) $ 167 $ 445 $ (21) $ (14) Net realized gain (loss) on investments.................. (343) (1,289) (582) (2,783) (1,647) (673) Net change in unrealized appreciation (depreciation) of investments............... (312) (7,878) (3,039) (8,303) (12,685) (1,795) ------- ------- ------- -------- -------- ------- Net increase (decrease) in net assets resulting from operations................... (635) (9,322) (3,454) (10,641) (14,353) (2,482) ------- ------- ------- -------- -------- ------- From unit transactions: Net proceeds from the issuance of units.......... 34,722 59,872 34,559 93,312 151,596 20,345 Net asset value of units redeemed or used to meet contract obligations....... (6,683) (9,979) (8,263) (17,734) (27,794) (5,818) ------- ------- ------- -------- -------- ------- Net increase from unit transactions................. 28,039 49,893 26,296 75,578 123,802 14,527 ------- ------- ------- -------- -------- ------- Net increase in net assets.... 27,404 40,571 22,842 64,937 109,449 12,045 Net assets beginning of period 0 0 0 0 0 0 ------- ------- ------- -------- -------- ------- Net assets end of period*..... $27,404 $40,571 $22,842 $ 64,937 $109,449 $12,045 ======= ======= ======= ======== ======== ======= Unit transactions: Units outstanding beginning of period.................... 0 0 0 0 0 0 Units issued during the period 3,753 6,717 3,589 10,631 17,144 2,021 Units redeemed during the period....................... (745) (1,359) (910) (2,430) (3,458) (636) ------- ------- ------- -------- -------- ------- Units outstanding end of period....................... 3,008 5,358 2,679 8,201 13,686 1,385 ======= ======= ======= ======== ======== ======= ---------- *Includes undistributed net investment income (loss) of: $ 20 $ (155) $ 167 $ 445 $ (21) $ (14) ======= ======= ======= ======== ======== =======
** Commencement of operations See notes to financial statements. F-14
MONY Variable Universal Life ------------------------------------------------------------------------------------------------------------ Enterprise Accumulation Trust INVESCO Variable Investment Funds --------------------------------------------------------------- ------------------------------------------- Small Small Multi-Cap Company Company Financial Health Managed Growth Growth Value Total Return Services Sciences Telecommunications Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------ ------------ ------------ ------------ ------------ ------------ ------------------ For the For the For the For the For the For the For the For the period period period period period period period period February 22, February 15, February 8, February 8, March 5, February 8, February 8, February 15, 2002** 2002** 2002** 2002** 2002** 2002** 2002** 2002** through through through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------------ $ 50 $ (90) $ (196) $ 1,913 $ 1,014 $ 29 $ (53) $ (41) (388) (886) (1,294) (1,608) 87 (81) (109) (1,309) (550) (5,584) (8,782) (5,942) 487 (686) (1,430) (2,341) ------- ------- -------- -------- ------- ------- ------- ------- (888) (6,560) (10,272) (5,637) 1,588 (738) (1,592) (3,691) ------- ------- -------- -------- ------- ------- ------- ------- 16,968 39,484 75,500 128,327 42,445 10,526 24,988 16,775 (3,376) (8,570) (13,172) (25,514) (7,379) (1,731) (3,410) (5,865) ------- ------- -------- -------- ------- ------- ------- ------- 13,592 30,914 62,328 102,813 35,066 8,795 21,578 10,910 ------- ------- -------- -------- ------- ------- ------- ------- 12,704 24,354 52,056 97,176 36,654 8,057 19,986 7,219 0 0 0 0 0 0 0 0 ------- ------- -------- -------- ------- ------- ------- ------- $12,704 $24,354 $ 52,056 $ 97,176 $36,654 $ 8,057 $19,986 $ 7,219 ======= ======= ======== ======== ======= ======= ======= ======= 0 0 0 0 0 0 0 0 1,964 4,495 8,147 13,130 4,423 1,115 2,865 1,917 (443) (1,032) (1,676) (2,723) (964) (190) (398) (785) ------- ------- -------- -------- ------- ------- ------- ------- 1,521 3,463 6,471 10,407 3,459 925 2,467 1,132 ======= ======= ======== ======== ======= ======= ======= ======= $ 50 $ (90) $ (196) $ 1,913 $ 1,014 $ 29 $ (53) $ (41) ======= ======= ======== ======== ======= ======= ======= =======
F-15 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Variable Universal Life ----------------------------------------------------------------------------- Janus Aspen Series Lord Abbett Series Fund -------------------------------------- ------------------------------------- Capital Flexible International Bond Growth and Mid-Cap Appreciation Income Growth Debenture Income Value Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------ ------------- ------------ ------------ ------------ For the For the For the For the For the For the period period period period period period February 22, February 21, February 21, February 21, February 27, March 1, 2002** 2002** 2002** 2002** 2002** 2002** through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------- ------------ ------------ ------------ From operations: Net investment income (loss).. $ (18) $ 539 $ 106 $ 404 $ 193 $ 76 Net realized gain (loss) on investments.................. (125) 127 (856) 11 (465) (204) Net change in unrealized appreciation (depreciation) of investments............... (1,623) 813 (10,963) 321 (4,369) (680) ------- ------- -------- ------- ------- ------- Net increase (decrease) in net assets resulting from operations................... (1,766) 1,479 (11,713) 736 (4,641) (808) ------- ------- -------- ------- ------- ------- From unit transactions: Net proceeds from the issuance of units.......... 23,115 29,884 71,554 23,371 75,609 32,145 Net asset value of units redeemed or used to meet contract obligations....... (3,540) (3,904) (8,177) (2,495) (8,393) (3,850) ------- ------- -------- ------- ------- ------- Net increase from unit transactions................. 19,575 25,980 63,377 20,876 67,216 28,295 ------- ------- -------- ------- ------- ------- Net increase in net assets.... 17,809 27,459 51,664 21,612 62,575 27,487 Net assets beginning of period 0 0 0 0 0 0 ------- ------- -------- ------- ------- ------- Net assets end of period*..... $17,809 $27,459 $ 51,664 $21,612 $62,575 $27,487 ======= ======= ======== ======= ======= ======= Unit transactions: Units outstanding beginning of period.................... 0 0 0 0 0 0 Units issued during the period 2,395 3,120 7,448 2,260 8,825 3,533 Units redeemed during the period....................... (405) (584) (993) (243) (1,105) (446) ------- ------- -------- ------- ------- ------- Units outstanding end of period....................... 1,990 2,536 6,455 2,017 7,720 3,087 ======= ======= ======== ======= ======= ======= ---------- *Includes undistributed net investment income (loss) of: $ (18) $ 539 $ 106 $ 404 $ 193 $ 76 ======= ======= ======== ======= ======= =======
** Commencement of operations See notes to financial statements. F-16
MONY Variable Universal Life ----------------------------------------------------------------------------------------- MFS Variable Insurance Trust MONY Series Fund, Inc. -------------------------------------------------- ------------------------------------- Mid Cap New Government Long Term Money Growth Discovery Total Return Utilities Securities Bond Market Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------ ------------ ------------ ------------ ------------ ------------ For the For the For the For the For the For the For the period period period period period period period February 15, February 15, February 8, February 15, February 21, February 22, February 6, 2002** 2002** 2002** 2002** 2002** 2002** 2002** through through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (92) $ (98) $ 62 $ 46 $ (242) $ (138) $ 1,834 (1,719) (381) (478) (48) 533 517 0 (5,543) (5,371) 418 (333) 2,820 3,521 0 ------- ------- -------- ------- -------- -------- --------- (7,354) (5,850) 2 (335) 3,111 3,900 1,834 ------- ------- -------- ------- -------- -------- --------- 44,470 37,517 83,121 11,102 116,848 53,372 909,463 (9,076) (5,800) (19,612) (2,371) (22,389) (10,633) (120,169) ------- ------- -------- ------- -------- -------- --------- 35,394 31,717 63,509 8,731 94,459 42,739 789,294 ------- ------- -------- ------- -------- -------- --------- 28,040 25,867 63,511 8,396 97,570 46,639 791,128 0 0 0 0 0 0 0 ------- ------- -------- ------- -------- -------- --------- $28,040 $25,867 $ 63,511 $ 8,396 $ 97,570 $ 46,639 $ 791,128 ======= ======= ======== ======= ======== ======== ========= 0 0 0 0 0 0 0 5,681 4,233 8,882 1,216 11,840 5,396 90,903 (1,366) (711) (2,261) (249) (2,553) (1,190) (12,385) ------- ------- -------- ------- -------- -------- --------- 4,315 3,522 6,621 967 9,287 4,206 78,518 ======= ======= ======== ======= ======== ======== ========= $ (92) $ (98) $ 62 $ 46 $ (242) $ (138) $ 1,834 ======= ======= ======== ======= ======== ======== =========
F-17 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Variable Universal Life ---------------------------------------------------------- The Universal Institutional Funds, Inc. ---------------------------------------------------------- Emerging Global Value U.S. Real Markets Equity Equity Estate Subaccount Subaccount Subaccount ------------------- ------------------- ------------------- For the period For the period For the period February 15, 2002** February 28, 2002** February 26, 2002** through through through December 31, December 31, December 31, 2002 2002 2002 ------------------- ------------------- ------------------- From operations: Net investment income (loss).. $ (79) $ 72 $ 1,698 Net realized gain (loss) on investments.................. (155) (100) (344) Net change in unrealized appreciation (depreciation) of investments............... (3,078) (353) (2,875) ------- ------ ------- Net increase (decrease) in net assets resulting from operations................... (3,312) (381) (1,521) ------- ------ ------- From unit transactions: Net proceeds from the issuance of units.......... 24,887 5,052 44,693 Net asset value of units redeemed or used to meet contract obligations....... (3,948) (854) (4,372) ------- ------ ------- Net increase from unit transactions................. 20,939 4,198 40,321 ------- ------ ------- Net increase in net assets.... 17,627 3,817 38,800 Net assets beginning of period 0 0 0 ------- ------ ------- Net assets end of period*..... $17,627 $3,817 $38,800 ======= ====== ======= Unit transactions: Units outstanding beginning of period.................... 0 0 0 Units issued during the period 2,491 569 4,674 Units redeemed during the period....................... (428) (107) (664) ------- ------ ------- Units outstanding end of period....................... 2,063 462 4,010 ======= ====== ======= ---------- * Includes undistributed net investment income (loss) of: $ (79) $ 72 $ 1,698 ======= ====== =======
** Commencement of operations See notes to financial statements. F-18
MONY Variable Universal Life --------------------------------------------------------------------------------------------------------- PBHG Insurance Series Funds PIMCO Variable Insurance Trust ------------------------------------ ------------------------------------------------------ Mid-Cap Select Global StocksPlus Value Value Bond Real Return Growth and Income Subaccount Subaccount Subaccount Subaccount Subaccount Total ------------------ ------------------ ------------------- --------------- ------------------- ------------ For the period For the period For the period For the period For the period February 8, 2002** February 8, 2002** February 22, 2002** March 1, 2002** February 22, 2002** For the through through through through through period ended December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 ------------------ ------------------ ------------------- --------------- ------------------- ------------ $ (216) $ 72 $ 391 $ 969 $ 1,835 $ 10,482 (3,446) (302) 139 922 (2,899) (22,178) (3,104) (1,164) 2,729 1,940 (15,728) (101,462) -------- ------- ------- -------- -------- ---------- (6,766) (1,394) 3,259 3,831 (16,792) (113,158) -------- ------- ------- -------- -------- ---------- 92,582 21,101 30,678 80,313 159,685 2,719,981 (22,282) (3,252) (3,433) (26,001) (26,199) (456,038) -------- ------- ------- -------- -------- ---------- 70,300 17,849 27,245 54,312 133,486 2,263,943 -------- ------- ------- -------- -------- ---------- 63,534 16,455 30,504 58,143 116,694 2,150,785 0 0 0 0 0 0 -------- ------- ------- -------- -------- ---------- $ 63,534 $16,455 $30,504 $ 58,143 $116,694 $2,150,785 ======== ======= ======= ======== ======== ========== 0 0 0 0 0 9,975 2,476 2,889 7,603 17,379 (2,629) (413) (327) (2,553) (3,252) -------- ------- ------- -------- -------- 7,346 2,063 2,562 5,050 14,127 ======== ======= ======= ======== ======== $ (216) $ 72 $ 391 $ 969 $ 1,835 $ 10,482 ======== ======= ======= ======== ======== ==========
F-19 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS 1. Organization and Business: MONY Variable Account L (the "Variable Account") is a separate investment account established on November 28, 1990 by MONY Life Insurance Company ("MONY"), under the laws of the State of New York. The Variable Account operates as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). The Variable Account holds assets that are segregated from all of MONY's other assets and, at present, is used to support Flexible Premium Variable Life Insurance policies, which include Variable Life (Strategist), Variable Universal Life (MONYEquity Master, MONY Custom Equity Master, MONY Custom Estate Master and MONY Variable Universal Life) and MONY Survivorship Variable Universal Life. These policies are issued by MONY. For presentation purposes, the information related only to the MONY Variable Universal Life Insurance policies is presented here. There are thirty-five MONY Variable Universal Life subaccounts within the Variable Account, each of which invests only in a corresponding portfolio of the MONY Series Fund, Inc. (the "Fund"), the Enterprise Accumulation Trust ("Enterprise"), Alger American Fund, INVESCO Variable Investment Funds, Lord Abbett Series Fund, MFS Variable Insurance Trust, PIMCO Variable Insurance Trust, PBHG Insurance Series Funds, The Universal Institutional Funds, Inc., or Janus Aspen Series (collectively, the "Funds"). The Funds are registered under the 1940 Act as open end, diversified, management investment companies. The Fund and Enterprise are affiliated with MONY. These financial statements should be read in conjunction with the financial statements and footnotes of the Funds which were distributed by MONY to the Policyholders. 2. Significant Accounting Policies: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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 each of the respective Funds' portfolios is stated at value which is the net asset value of the respective portfolio as reported by such portfolio. Net asset value is based upon market or fair valuations of the securities held in each of the corresponding portfolios of the Funds. For the Money Market Portfolio, the net asset value is based on the amortized cost of the securities held, which approximates market value. Investment Transactions and Investment Income: Investments in the portfolios of the Funds are recorded on the trade date. Realized gains and losses on redemption of investments in the portfolios of the Funds are determined on the identified cost basis. Dividend income and distributions of net realized gains from Portfolios of the Funds are recorded on ex-dividend date. Investment income includes dividends from net investment income and distributions of net realized gains received from the respective portfolios of the Funds. Dividends and distributions received are reinvested in additional shares of the respective portfolios of the Funds. Taxes: MONY is currently taxed as a life insurance company and will include the Variable Account's operations in its tax return. MONY does not expect, based on current tax law, to incur any income tax burden upon the earnings or realized gains F-20 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) attributable to the Variable Account. Based on this expectation, no charges are currently being deducted from the Variable Account for Federal income tax purposes. 3. Related Party Transactions: MONY is the legal owner of the assets held by the Variable Account. Policy premiums received from MONY by the Variable Account represent gross policy premiums recorded by MONY less deductions retained as compensation for certain sales distribution expenses and premium taxes. The cost of insurance, administration charges, mortality and expense risk charges and, if applicable, the cost of any optional benefits added by riders to the insurance policies are deducted monthly from the cash value of the contract to compensate MONY. A surrender charge may be imposed by MONY when a full or partial surrender is requested by the policyholders. These deductions are treated as contractholder redemptions by the Variable Account. The amount deducted for the MONY Variable Universal Life Subaccounts for the period ended December 31, 2002 aggregated $288,347. MONY receives from the Variable Account the amounts deducted for mortality and expense risks at an annual rate of 0.65% of average daily net assets of each of the MONY Variable Universal Life subaccounts. MONY Life Insurance Company of America (MONY America), a wholly-owned subsidiary of MONY, acts as investment adviser to the Fund and receives amounts paid by the Fund for those services. Enterprise Capital Management, Inc., a wholly-owned subsidiary of MONY, acts as investment adviser to the portfolios of Enterprise, and it receives amounts paid by Enterprise for those services. MONY and MONY America receive fees directly from certain Funds for maintaining and servicing policyholders' accounts. During the period ended December 31, 2002, MONY received $288 in aggregate from certain Funds in connection with MONY Variable Universal Life subaccounts. 4. Investment Transactions: Cost of shares acquired and the proceeds from redemption of shares by each subaccount during the period ended December 31, 2002 were as follows:
Cost of Shares Acquired (Excludes Proceeds from MONY Variable Universal Life Subaccounts Reinvestments) Shares Redeemed ---------------------------------------- --------------- --------------- Alger American Fund Balanced Portfolio.................... $ 31,737 $ 3,752 Mid Cap Growth Portfolio.............. 55,015 5,253 Enterprise Accumulation Trust Equity Income Portfolio............... 31,082 4,861 Growth and Income Portfolio........... 86,461 11,059 Growth Portfolio...................... 133,882 10,349 Global Socially Responsive Portfolio.. 19,598 5,123 Managed Portfolio..................... 15,170 1,606 Multi-Cap Growth Portfolio............ 35,338 4,501
F-21 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 4. Investment Transactions: (continued)
Cost of Shares Acquired (Excludes Proceeds from MONY Variable Universal Life Subaccounts Reinvestments) Shares Redeemed ---------------------------------------- --------------- --------------- Small Company Growth Portfolio.......... $ 66,772 $ 4,610 Small Company Value Portfolio........... 111,073 8,452 Total Return Bond Portfolio............. 40,767 5,789 INVESCO Variable Insurance Funds Financial Services Portfolio............ 9,330 554 Health Sciences Portfolio............... 22,306 770 Telecommunications Portfolio............ 14,947 4,074 Janus Aspen Series Capital Appreciation Portfolio.......... 20,662 1,136 Flexible Income Portfolio............... 29,320 3,407 International Growth Portfolio.......... 66,616 3,428 Lord Abbett Series Fund Bond Debenture Portfolio................ 21,608 789 Growth and Income Portfolio............. 69,144 2,073 Mid-Cap Value Portfolio................. 29,390 1,139 MFS Variable Insurance Trust Mid Cap Growth Portfolio................ 40,135 4,818 New Discovery Portfolio................. 33,090 1,456 Total Return Portfolio.................. 67,374 3,985 Utilities Portfolio..................... 8,999 290 MONY Series Fund, Inc. Government Securities Portfolio......... 108,189 13,974 Long Term Bond Portfolio................ 50,229 7,614 Money Market Portfolio.................. 880,328 92,157 The Universal Institutional Funds, Inc. Emerging Markets Equity Portfolio....... 22,151 1,281 Global Value Equity Portfolio........... 4,747 557 U.S. Real Estate Portfolio.............. 43,387 3,149 PBHG Insurance Series Funds Mid-Cap Value Portfolio................. 85,030 14,910 Select Value Portfolio.................. 18,961 1,142 PIMCO Variable Insurance Trust Global Bond Portfolio................... 28,632 1,462 Real Return Portfolio................... 72,667 18,475 StocksPlus Growth and Income Portfolio.. 145,383 12,268
F-22 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 5. Financial Highlights: For a unit outstanding throughout the period ended December 31, 2002:
At December 31, 2002 For the period ended December 31, 2002 ----------------------------- ----------------------------------- Investment Net Assets Income Total MONY Variable Universal Life Subaccounts Units Unit Values (000s) Ratio*^ Expense Ratio**^ Return*** ---------------------------------------- ------ ----------- ---------- ---------- ---------------- --------- Alger American Fund Balanced Subaccount (1).................. 3,008 $ 9.11 $ 27 0.84% 0.65% (8.90)% Mid Cap Growth Subaccount (2)............ 5,358 7.57 41 0.00 0.65% (24.30) Enterprise Accumulation Trust Equity Income Subaccount (3)............. 2,679 8.53 23 1.88 0.65% (14.70) Growth and Income Subaccount (4)......... 8,201 7.92 65 2.01 0.65% (20.80) Growth Subaccount (4).................... 13,686 8.00 109 0.61 0.65% (20.00) Global Socially Responsive Subaccount (4) 1,385 8.70 12 0.50 0.65% (13.00) Managed Subaccount (5)................... 1,521 8.35 13 1.58 0.65% (16.50) Multi-Cap Growth Subaccount (3).......... 3,463 7.03 24 0.00 0.65% (29.70) Small Company Growth Subaccount (4)...... 6,471 8.05 52 0.00 0.65% (19.50) Small Company Value Subaccount (4)....... 10,407 9.34 97 0.67 0.65% (6.60) Total Return Bond Subaccount (10)........ 3,459 10.60 37 3.52 0.65% 6.00 INVESCO Variable Investment Funds Financial Services Subaccount (4)........ 925 8.71 8 1.44 0.65% (12.90) Health Sciences Subaccount (4)........... 2,467 8.10 20 0.00 0.65% (19.00) Telecommunications Subaccount (3)........ 1,132 6.38 7 0.00 0.65% (36.20) Janus Aspen Series Capital Appreciation Subaccount (5)...... 1,990 8.95 18 0.45 0.65% (10.50) Flexible Income Subaccount (1)........... 2,536 10.83 27 4.92 0.65% 8.30 International Growth Subaccount (1)...... 6,455 8.00 52 0.97 0.65% (20.00) Lord Abbett Series Funds Bond Debenture Subaccount (1)............ 2,017 10.71 22 3.98 0.65% 7.10 Growth and Income Subaccount (6)......... 7,720 8.11 63 1.31 0.65% (18.90) Mid-Cap Value Subaccount (7)............. 3,087 8.90 27 1.52 0.65% (11.00) MFS Variable Insurance Trust Mid Cap Growth Subaccount (3)............ 4,315 6.50 28 0.00 0.65% (35.00) New Discovery Subaccount (3)............. 3,522 7.35 26 0.00 0.65% (26.50) Total Return Subaccount (4).............. 6,621 9.59 64 0.51 0.65% (4.10) Utilities Subaccount (3)................. 967 8.68 8 1.80 0.65% (13.20) MONY Series Fund, Inc. Government Securities Subaccount (1)..... 9,287 10.51 98 0.12 0.65% 5.10 Long Term Bond Subaccount (5)............ 4,206 11.09 47 0.05 0.65% 10.90 Money Market Subaccount (8).............. 78,518 10.08 791 1.42 0.65% 0.80
F-23 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 5. Financial Highlights: (continued)
At December 31, 2002 For the period ended December 31, 2002 ----------------------------- ------------------------------------ Investment Net Assets Income Total MONY Variable Universal Life Subaccounts Units Unit Values (000s) Ratio*/\ Expense Ratio**/\ Return*** ---------------------------------------- ------ ----------- ---------- ---------- ----------------- --------- The Universal Institutional Funds, Inc. Emerging Markets Equity Subaccount (3)..... 2,063 $ 8.54 $ 18 0.00% 0.65% (14.60)% Global Value Equity Subaccount (9)......... 462 8.27 4 2.47 0.65% (17.30) U.S. Real Estate Subaccount (2)............ 4,010 9.68 39 7.04 0.65% (3.20) PBHG Insurance Series Fund Mid-Cap Value Subaccount (4)............... 7,346 8.65 64 0.00 0.65% (13.50) Select Value Subaccount (4)................ 2,063 7.98 16 1.85 0.65% (20.20) PIMCO Variable Insurance Trust Global Bond Subaccount (5)................. 2,562 11.90 31 2.68 0.65% 19.00 Real Return Subaccount (7)................. 5,050 11.51 58 4.48 0.65% 15.10 StocksPlus Growth and Income Subaccount (5) 14,127 8.26 117 3.37 0.65% (17.40)
---------- * This ratio represents the amount of dividend income, excluding distributions from net realized gains, received by the subaccount from the underlying fund, net of investment advisory fees assessed by the underlying fund's investment adviser and other expenses of the underlying fund, divided by the average net assets of the subaccount. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the net asset value per Unit. The recognition of dividend income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. ** This ratio represents the annual contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratio includes only those expenses that result in a direct reduction to net asset value per Unit. Charges made directly to contractholder accounts by redemption of Units and expenses of the respective underlying fund are excluded from this ratio. ***Represents the total return for the period indicated, including changes in the value of the underlying fund, and reflects deductions for all items included in the Expense Ratio. The Total Return does not include any expenses assessed through the redemption of Units; the Total Return would have been lower had such expenses been included in the calculation. Total returns for periods less than one year are not annualized. /\ Annualized (1)For the period February 21, 2002 (commencement of operations) through December 31, 2002 (2)For the period February 26, 2002 (commencement of operations) through December 31, 2002 (3)For the period February 15, 2002 (commencement of operations) through December 31, 2002 (4)For the period February 8, 2002 (commencement of operations) through December 31, 2002 (5)For the period February 22, 2002 (commencement of operations) through December 31, 2002 (6)For the period February 27, 2002 (commencement of operations) through December 31, 2002 (7)For the period March 1, 2002 (commencement of operations) through December 31, 2002 (8)For the period February 6, 2002 (commencement of operations) through December 31, 2002 (9)For the period February 28, 2002 (commencement of operations) through December 31, 2002 (10)For the period March 5, 2002 (commencement of operations) through December 31, 2002 F-24 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of MONY Life Insurance Company and the Contractholders of MONY Variable Account L - MONY Survivorship Variable Universal Life In our opinion, the accompanying statements of assets and liabilities 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 each of the MONY Survivorship Variable Universal Life's Subaccounts of MONY Variable Account L at December 31, 2002, and the results of each of their operations, the changes in each of their net assets and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "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 of America, 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 investments at December 31, 2002 by correspondence with the underlying funds' transfer agents, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York April 8, 2003 F-25 [THIS PAGE INTENTIONALLY LEFT BLANK] F-26 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES December 31, 2002
MONY Survivorship Variable Universal Life -------------------------------------------------- Alger American Fund Enterprise Accumulation Trust -------------------- ---------------------------- Mid Cap Equity Growth and Balanced Growth Income Income Subaccount Subaccount Subaccount Subaccount ---------- ---------- ---------- ---------- ASSETS Shares held in respective Funds........................... 422 665 1,718 1,622 ====== ======= ====== ====== Investments at cost....................................... $4,955 $10,160 $7,128 $6,195 ====== ======= ====== ====== Investments in respective Funds, at net asset value....... $4,767 $ 8,277 $7,251 $6,407 ------ ------- ------ ------ Total assets....................................... 4,767 8,277 7,251 6,407 ------ ------- ------ ------ LIABILITIES Amount due to MONY........................................ 1 3 2 2 ------ ------- ------ ------ Total liabilities.................................. 1 3 2 2 ------ ------- ------ ------ Net assets................................................ $4,766 $ 8,274 $7,249 $6,405 ====== ======= ====== ====== Net assets consist of: Contractholders' net payments............................ $4,960 $10,281 $7,443 $6,777 Undistributed net investment income (loss)............... 19 (16) 88 73 Accumulated net realized loss on investments............. (25) (108) (405) (657) Net unrealized appreciation (depreciation) of investments (188) (1,883) 123 212 ------ ------- ------ ------ Net assets................................................ $4,766 $ 8,274 $7,249 $6,405 ====== ======= ====== ====== Number of units outstanding*.............................. 528 1,110 816 809 ------ ------- ------ ------ Net asset value per unit outstanding*..................... $ 9.02 $ 7.46 $ 8.88 $ 7.91 ====== ======= ====== ======
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-27 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONY Survivorship Variable Universal Life ------------------------------------------------------ Enterprise AccumulationTrust ------------------------------------------------------ Global Multi-Cap Small Company Growth Socially Responsive Growth Growth Subaccount Subaccount Subaccount Subaccount ---------- ------------------- ---------- ------------- ASSETS Shares held in respective Funds........................... 758 786 1,068 3,705 ====== ====== ======= ======= Investments at cost....................................... $3,206 $7,576 $ 7,548 $24,646 ====== ====== ======= ======= Investments in respective Funds, at net asset value....... $3,018 $6,736 $ 5,886 $22,155 ------ ------ ------- ------- Total assets....................................... 3,018 6,736 5,886 22,155 ------ ------ ------- ------- LIABILITIES Amount due to MONY........................................ 1 2 2 7 ------ ------ ------- ------- Total liabilities.................................. 1 2 2 7 ------ ------ ------- ------- Net assets................................................ $3,017 $6,734 $ 5,884 $22,148 ====== ====== ======= ======= Net assets consist of: Contractholders' net payments............................ $3,205 $7,607 $ 7,620 $25,045 Undistributed net investment income (loss)............... 12 12 (12) (41) Accumulated net realized gain (loss) on investments...... (12) (45) (62) (365) Net unrealized appreciation (depreciation) of investments (188) (840) (1,662) (2,491) ------ ------ ------- ------- Net assets................................................ $3,017 $6,734 $ 5,884 $22,148 ====== ====== ======= ======= Number of units outstanding*.............................. 319 811 810 2,865 ------ ------ ------- ------- Net asset value per unit outstanding*..................... $ 9.44 $ 8.31 $ 7.27 $ 7.73 ====== ====== ======= =======
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-28
MONY Survivorship Variable Universal Life ------------------------------------------------------------------------------------------------------ Enterprise Accumulation INVESCO Variable Trust Investment Fund Janus Aspen Series Lord Abbett Series Fund ------------- ------------------ ------------------------------------ ------------------------------- Small Company Capital Flexible International Bond Growth and Mid-Cap Value Financial Services Appreciation Income Growth Debenture Income Value Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------- ------------------ ------------ ---------- ------------- ---------- ---------- ---------- 370 625 564 273 127 87 304 351 ====== ======= ======= ====== ====== ====== ====== ====== $6,630 $ 7,606 $10,756 $3,444 $2,761 $ 914 $6,312 $5,000 ====== ======= ======= ====== ====== ====== ====== ====== $6,352 $ 6,559 $ 9,723 $3,505 $2,179 $ 931 $5,731 $4,875 ------ ------- ------- ------ ------ ------ ------ ------ 6,352 6,559 9,723 3,505 2,179 931 5,731 4,875 ------ ------- ------- ------ ------ ------ ------ ------ 2 2 3 1 0 0 1 2 ------ ------- ------- ------ ------ ------ ------ ------ 2 2 3 1 0 0 1 2 ------ ------- ------- ------ ------ ------ ------ ------ $6,350 $ 6,557 $ 9,720 $3,504 $2,179 $ 931 $5,730 $4,873 ====== ======= ======= ====== ====== ====== ====== ====== $6,125 $ 7,611 $10,799 $3,321 $2,824 $ 894 $6,377 $4,992 186 30 8 48 12 20 17 22 317 (37) (54) 74 (75) 0 (83) (16) (278) (1,047) (1,033) 61 (582) 17 (581) (125) ------ ------- ------- ------ ------ ------ ------ ------ $6,350 $ 6,557 $ 9,720 $3,504 $2,179 $ 931 $5,730 $4,873 ====== ======= ======= ====== ====== ====== ====== ====== 747 786 1,112 319 275 89 708 501 ------ ------- ------- ------ ------ ------ ------ ------ $ 8.50 $ 8.34 $ 8.74 $10.98 $ 7.92 $10.42 $ 8.09 $ 9.71 ====== ======= ======= ====== ====== ====== ====== ======
F-29 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONY Survivorship Variable Universal Life ------------------------------------------------------------- MFS Variable Insurance Trust MONY Series Fund, Inc. --------------------------- -------------------------------- New Total Government Long Term Money Discovery Return Securities Bond Market Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------- ---------- ---------- ---------- ASSETS Shares held in respective Funds....................... 902 521 1,336 0** 78,884 ======= ====== ======= ====== ======= Investments at cost........... $10,492 $9,336 $15,358 $ 0 $78,884 ======= ====== ======= ====== ======= Investments in respective Funds, at net asset value... $ 9,422 $8,934 $15,791 $ 0 $78,884 ------- ------ ------- ------ ------- Total assets........... 9,422 8,934 15,791 0 78,884 ------- ------ ------- ------ ------- LIABILITIES Amount due to MONY............ 3 3 5 0 24 ------- ------ ------- ------ ------- Total liabilities...... 3 3 5 0 24 ------- ------ ------- ------ ------- Net assets.................... $ 9,419 $8,931 $15,786 $ 0 $78,860 ======= ====== ======= ====== ======= Net assets consist of: Contractholders' net payments................... $10,713 $9,376 $15,195 $ (131) $78,566 Undistributed net investment income (loss)... (17) (16) (30) (1) 294 Accumulated net realized gain (loss) on investments. (207) (27) 188 132 0 Net unrealized appreciation (depreciation) of investments................ (1,070) (402) 433 0 0 ------- ------ ------- ------ ------- Net assets.................... $ 9,419 $8,931 $15,786 $ 0 $78,860 ======= ====== ======= ====== ======= Number of units outstanding*.. 1,203 965 1,509 0** 7,843 ------- ------ ------- ------ ------- Net asset value per unit outstanding*................ $ 7.83 $ 9.25 $ 10.46 $10.76 $ 10.05 ======= ====== ======= ====== =======
---------- * Units outstanding have been rounded for presentation purposes. **Rounds to less than one. See notes to financial statements. F-30
MONY Survivorship Variable Universal Life -------------------------------------------------------------------------------------------------- The Universal Institutional Funds, Inc. PBHG Insurance Series Funds PIMCO Variable Insurance Trust -------------------------- ------------------------- -------------------------------- Emerging StocksPlus Markets U.S. Real Mid-Cap Select Global Growth and Equity Estate Value Value Bond Real Return Income Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Total ---------- ---------- ---------- ---------- ---------- ----------- ---------- -------- 1,174.... 1,336 1,291 0** 444 2,147 2,396 ======= ======= ======= ====== ====== ======= ======= $ 8,400.... $16,221 $15,071 $ 0 $4,877 $24,691 $17,618 $315,785 ======= ======= ======= ====== ====== ======= ======= ======== $ 7,092 $15,139 $14,068 $ 0 $5,194 $25,547 $17,372 $301,795 ------- ------- ------- ------ ------ ------- ------- -------- 7,092 15,139 14,068 0 5,194 25,547 17,372 301,795 ------- ------- ------- ------ ------ ------- ------- -------- 2 4 4 0 1 7 5 89 ------- ------- ------- ------ ------ ------- ------- -------- 2 4 4 0 1 7 5 89 ------- ------- ------- ------ ------ ------- ------- -------- $ 7,090 $15,135 $14,064 $ 0 $5,193 $25,540 $17,367 $301,706 ======= ======= ======= ====== ====== ======= ======= ======== $ 8,484 $15,659 $15,348 $ (684) $4,787 $23,495 $18,344 $315,033 (14) 724 (25) (1) 56 445 279 2,172 (72) (166) (256) 685 33 744 (1,010) (1,509) (1,308) (1,082) (1,003) 0 317 856 (246) (13,990) ------- ------- ------- ------ ------ ------- ------- -------- $ 7,090 $15,135 $14,064 $ 0 $5,193 $25,540 $17,367 $301,706 ======= ======= ======= ====== ====== ======= ======= ======== 874 1,667 1,672 0** 456 2,219 2,168 ------- ------- ------- ------ ------ ------- ------- $ 8.11 $ 9.08 $ 8.41 $10.18 $11.37 $ 11.51 $ 8.01 ======= ======= ======= ====== ====== ======= =======
F-31 MONY Variable Account L STATEMENT OF OPERATIONS
MONY Survivorship Variable Universal Life -------------------------------------------------------------------------------- Alger American Fund Enterprise Accumulation Trust ----------------------------- ------------------------------------------------- Mid Cap Growth and Balanced Growth Equity Income Income Subaccount Subaccount Subaccount Subaccount Growth Subaccount --------------- -------------- -------------- -------------- -------------------- For the period For the period For the period For the period For the period April 3, 2002** May 2, 2002** July 5, 2002** May 5, 2002** September 10, 2002** through through through through through December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 --------------- -------------- -------------- -------------- -------------------- Dividend income............... $ 25 $ 0 $ 102 $ 87 $ 15 Distribution from net realized gains.............. 0 0 0 0 0 Mortality and expense risk charges..................... (6) (16) (14) (14) (3) ----- ------- ----- ----- ----- Net investment income (loss).. 19 (16) 88 73 12 ----- ------- ----- ----- ----- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ (25) (108) (405) (657) (12) Net change in unrealized appreciation (depreciation) of investments................ (188) (1,883) 123 212 (188) ----- ------- ----- ----- ----- Net realized and unrealized gain (loss) on investments.. (213) (1,991) (282) (445) (200) ----- ------- ----- ----- ----- Net increase (decrease) in net assets resulting from operations.................. $(194) $(2,007) $(194) $(372) $(188) ===== ======= ===== ===== =====
** Commencement of operations See notes to financial statements. F-32
MONY Survivorship Variable Universal Life ----------------------------------------------------------------------------------------------------------------------------- INVESCO Variable Investment Enterprise Accumulation Trust Fund Janus Aspen Series ---------------------------------------------------------------- -------------- -------------------------------------------- Global Multi-Cap Small Company Small Company Financial Capital Flexible International Socially Responsive Growth Growth Value Services Appreciation Income Growth Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------------- -------------- -------------- --------------- -------------- -------------- --------------- -------------- For the period For the period For the period For the period For the period For the period For the period For the period May 2, 2002** May 2, 2002** May 2, 2002** April 3, 2002** May 2, 2002** May 2, 2002** April 3, 2002** May 29, 2002** through through through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 2002 ------------------- -------------- -------------- --------------- -------------- -------------- --------------- -------------- $ 25 $ 0 $ 0 $ 23 $ 43 $ 25 $ 54 $ 17 0 0 0 172 0 0 0 0 (13) (12) (41) (9) (13) (17) (6) (5) ----- ------- ------- ----- ------- ------- ---- ----- 12 (12) (41) 186 30 8 48 12 ----- ------- ------- ----- ------- ------- ---- ----- (45) (62) (365) 317 (37) (54) 74 (75) (840) (1,662) (2,491) (278) (1,047) (1,033) 61 (582) ----- ------- ------- ----- ------- ------- ---- ----- (885) (1,724) (2,856) 39 (1,084) (1,087) 135 (657) ----- ------- ------- ----- ------- ------- ---- ----- $(873) $(1,736) $(2,897) $ 225 $(1,054) $(1,079) $183 $(645) ===== ======= ======= ===== ======= ======= ==== =====
F-33 MONY Variable Account L STATEMENT OF OPERATIONS (continued)
MONY Survivorship Variable Universal Life -------------------------------------------------------------------------------- Lord Abbett Series Fund MFS Variable Insurance Trust -------------------------------------------------- ---------------------------- Growth and Total Bond Debenture Income Mid-Cap Value New Discovery Return Subaccount Subaccount Subaccount Subaccount Subaccount ----------------- --------------- ----------------- -------------- -------------- For the period For the period For the period For the period For the period August 21, 2002** April 3, 2002** August 21, 2002** May 29, 2002** May 2, 2002** through through through through through December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 ----------------- --------------- ----------------- -------------- -------------- Dividend income............... $19 $ 24 $ 28 $ 0 $ 0 Distribution from net realized gains.............. 2 1 0 0 0 Mortality and expense risk charges..................... (1) (8) (6) (17) (16) --- ----- ----- ------- ----- Net investment income (loss).. 20 17 22 (17) (16) --- ----- ----- ------- ----- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ 0 (83) (16) (207) (27) Net change in unrealized appreciation (depreciation) of investments................ 17 (581) (125) (1,070) (402) --- ----- ----- ------- ----- Net realized and unrealized gain (loss) on investments.. 17 (664) (141) (1,277) (429) --- ----- ----- ------- ----- Net increase (decrease) in net assets resulting from operations.................. $37 $(647) $(119) $(1,294) $(445) === ===== ===== ======= =====
** Commencement of operations See notes to financial statements. F-34
MONY Survivorship Variable Universal Life ----------------------------------------------------------------------------------------------------------- The Universal MONY Series Fund, Inc. Institutional Funds, Inc. PBHG Insurance Series Funds --------------------------------------------- ---------------------------- ------------------------------ Government Long Money Emerging U.S. Real Securities Term Bond Market Markets Equity Estate Mid-Cap Value Select Value Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------------- -------------- -------------- -------------- -------------- ---------------- For the period For the period For the period For the period For the period For the period For the period May 29, 2002** August 5, 2002** July 3, 2002** May 2, 2002** May 29, 2002** May 29, 2002** August 5, 2002** through through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 -------------- ---------------- -------------- -------------- -------------- -------------- ---------------- $ 0 $ 0 $390 $ 0 $ 478 $ 0 $ 0 0 0 0 0 268 0 0 (30) (1) (96) (14) (22) (25) (1) ---- ---- ---- ------- ------- ------- ---- (30) (1) 294 (14) 724 (25) (1) ---- ---- ---- ------- ------- ------- ---- 188 132 0 (72) (166) (256) 685 433 0 0 (1,308) (1,082) (1,003) 0 ---- ---- ---- ------- ------- ------- ---- 621 132 0 (1,380) (1,248) (1,259) 685 ---- ---- ---- ------- ------- ------- ---- $591 $131 $294 $(1,394) $ (524) $(1,284) $684 ==== ==== ==== ======= ======= ======= ====
F-35 MONY Variable Account L STATEMENT OF OPERATIONS (continued)
MONY Survivorship Variable Universal Life ---------------------------------------------------------- PIMCO Variable Insurance Trust --------------------------------------------- StocksPlus Growth and Global Bond Real Return Income Subaccount Subaccount Subaccount Total -------------- --------------- --------------- ------------ For the period For the period For the period May 29, 2002** April 3, 2002** April 3, 2002** For the through through through period ended December 31, December 31, December 31, December 31, 2002 2002 2002 2002 -------------- --------------- --------------- ------------ Dividend income............... $ 39 $ 439 $ 312 $ 2,145 Distribution from net realized gains.............. 22 45 0 510 Mortality and expense risk charges..................... (5) (39) (33) (483) ---- ------ ------- -------- Net investment income......... 56 445 279 2,172 ---- ------ ------- -------- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ 33 744 (1,010) (1,509) Net change in unrealized appreciation (depreciation) of investments................ 317 856 (246) (13,990) ---- ------ ------- -------- Net realized and unrealized gain (loss) on investments.. 350 1,600 (1,256) (15,499) ---- ------ ------- -------- Net increase (decrease) in net assets resulting from operations.................. $406 $2,045 $ (977) $(13,327) ==== ====== ======= ========
---------- ** Commencement of operations See notes to financial statements. F-36 [THIS PAGE INTENTIONALLY LEFT BLANK] F-37 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS
MONY Survivorship Variable Universal Life -------------------------------------------------------------------------------- Alger American Fund Enterprise Accumulation Trust ----------------------------- ------------------------------------------------- Mid Cap Equity Growth and Balanced Growth Income Income Growth Subaccount Subaccount Subaccount Subaccount Subaccount --------------- -------------- -------------- -------------- -------------------- For the period For the period For the period For the period For the period April 3, 2002** May 2, 2002** July 5, 2002** May 5, 2002** September 10, 2002** through through through through through December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 --------------- -------------- -------------- -------------- -------------------- From operations: Net investment income (loss). $ 19 $ (16) $ 88 $ 73 $ 12 Net realized gain (loss) on investments................ (25) (108) (405) (657) (12) Net change in unrealized appreciation (depreciation) of investments................ (188) (1,883) 123 212 (188) ------ ------- ------- ------- ------ Net increase (decrease) in net assets resulting from operations................... (194) (2,007) (194) (372) (188) ------ ------- ------- ------- ------ From unit transactions: Net proceeds from the issuance of units.......... 5,220 10,848 15,676 14,835 3,467 Net asset value of units redeemed or used to meet contract obligations....... (260) (567) (8,233) (8,058) (262) ------ ------- ------- ------- ------ Net increase from unit transactions................. 4,960 10,281 7,443 6,777 3,205 ------ ------- ------- ------- ------ Net increase in net assets.... 4,766 8,274 7,249 6,405 3,017 Net assets beginning of period 0 0 0 0 0 ------ ------- ------- ------- ------ Net assets end of period*..... $4,766 $ 8,274 $ 7,249 $ 6,405 $3,017 ====== ======= ======= ======= ====== Unit transactions: Units outstanding beginning of period.................... 0 0 0 0 0 Units issued during the period 556 1,179 1,711 1,793 346 Units redeemed during the period....................... (28) (69) (895) (984) (27) ------ ------- ------- ------- ------ Units outstanding end of period....................... 528 1,110 816 809 319 ====== ======= ======= ======= ====== ---------- * Includes undistributed net investment income (loss) of: $ 19 $ (16) $ 88 $ 73 $ 12 ====== ======= ======= ======= ======
** Commencement of operations See notes to financial statements. F-38
MONY Survivorship Variable Universal Life ------------------------------------------------------------------------------------------------------------------------------ INVESCO Variable Enterprise Accumulation Trust Investment Fund Janus Aspen Series ---------------------------------------------------------------- --------------- -------------------------------------------- Small Small Global Multi-Cap Company Company Financial Capital Flexible International Socially Responsive Growth Growth Value Services Appreciation Income Growth Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------------- -------------- -------------- --------------- --------------- -------------- --------------- -------------- For the period For the period For the period For the period For the period For the period For the period For the period May 2, 2002** May 2, 2002** May 2, 2002** April 3, 2002** May 2, 2002** May 2, 2002** April 3, 2002** May 29, 2002** through through through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 2002 ------------------- -------------- -------------- --------------- --------------- -------------- --------------- -------------- $ 12 $ (12) $ (41) $ 186 $ 30 $ 8 $ 48 $ 12 (45) (62) (365) 317 (37) (54) 74 (75) (840) (1,662) (2,491) (278) (1,047) (1,033) 61 (582) ------ ------- ------- ------- ------- ------- ------- ------ (873) (1,736) (2,897) 225 (1,054) (1,079) 183 (645) ------ ------- ------- ------- ------- ------- ------- ------ 7,996 7,997 26,609 13,989 7,996 11,465 10,617 3,150 (389) (377) (1,564) (7,864) (385) (666) (7,296) (326) ------ ------- ------- ------- ------- ------- ------- ------ 7,607 7,620 25,045 6,125 7,611 10,799 3,321 2,824 ------ ------- ------- ------- ------- ------- ------- ------ 6,734 5,884 22,148 6,350 6,557 9,720 3,504 2,179 0 0 0 0 0 0 0 0 ------ ------- ------- ------- ------- ------- ------- ------ $6,734 $ 5,884 $22,148 $ 6,350 $ 6,557 $ 9,720 $ 3,504 $2,179 ====== ======= ======= ======= ======= ======= ======= ====== 0 0 0 0 0 0 0 0 855 854 3,067 1,669 829 1,184 1,012 315 (44) (44) (202) (922) (43) (72) (693) (40) ------ ------- ------- ------- ------- ------- ------- ------ 811 810 2,865 747 786 1,112 319 275 ====== ======= ======= ======= ======= ======= ======= ====== $ 12 $ (12) $ (41) $ 186 $ 30 $ 8 $ 48 $ 12 ====== ======= ======= ======= ======= ======= ======= ======
F-39 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Survivorship Variable Universal Life -------------------------------------------------------------------------------- Lord Abbett Series Fund MFS Variable Insurance Trust -------------------------------------------------- ---------------------------- Bond Growth and Mid-Cap New Total Debenture Income Value Discovery Return Subaccount Subaccount Subaccount Subaccount Subaccount ----------------- --------------- ----------------- -------------- -------------- For the period For the period For the period For the period For the period August 21, 2002** April 3, 2002** August 21, 2002** May 29, 2002** May 2, 2002** through through through through through December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 ----------------- --------------- ----------------- -------------- -------------- From operations: Net investment income (loss). $ 20 $ 17 $ 22 $ (17) $ (16) Net realized gain (loss) on investments................ 0 (83) (16) (207) (27) Net change in unrealized appreciation (depreciation) of investments................ 17 (581) (125) (1,070) (402) ---- ------ ------ ------- ------ Net increase (decrease) in net assets resulting from operations................... 37 (647) (119) (1,294) (445) ---- ------ ------ ------- ------ From unit transactions: Net proceeds from the issuance of units.......... 938 6,790 5,343 11,594 9,871 Net asset value of units redeemed or used to meet contract obligations....... (44) (413) (351) (881) (495) ---- ------ ------ ------- ------ Net increase (decrease) from unit transactions............ 894 6,377 4,992 10,713 9,376 ---- ------ ------ ------- ------ Net increase in net assets.... 931 5,730 4,873 9,419 8,931 Net assets beginning of period 0 0 0 0 0 ---- ------ ------ ------- ------ Net assets end of period*..... $931 $5,730 $4,873 $ 9,419 $8,931 ==== ====== ====== ======= ====== Unit transactions: Units outstanding beginning of period.................... 0 0 0 0 0 Units issued during the period 93 758 538 1,313 1,018 Units redeemed during the period....................... (4) (50) (37) (110) (53) ---- ------ ------ ------- ------ Units outstanding end of period....................... 89 708 501 1,203 965 ==== ====== ====== ======= ====== ---------- * Includes undistributed net investment income (loss) of: $ 20 $ 17 $ 22 $ (17) $ (16) ==== ====== ====== ======= ======
** Commencement of operations See notes to financial statements. F-40
MONY Survivorship Variable Universal Life ----------------------------------------------------------------------------------------------------------- The Universal Institutional MONY Series Fund, Inc. Funds, Inc. PBHG Insurance Series Funds --------------------------------------------- ---------------------------- ------------------------------ Government Long Money Emerging U.S. Real Mid-Cap Select Securities Term Bond Market Markets Equity Estate Value Value Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------------- -------------- -------------- -------------- -------------- ---------------- For the period For the period For the period For the period For the period For the period For the period May 29, 2002** August 5, 2002** July 3, 2002** May 2, 2002** May 29, 2002** May 29, 2002** August 5, 2002** through through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 -------------- ---------------- -------------- -------------- -------------- -------------- ---------------- $ (30) $ (1) $ 294 $ (14) $ 724 $ (25) $ (1) 188 132 0 (72) (166) (256) 685 433 0 0 (1,308) (1,082) (1,003) 0 ------- ------- -------- ------- ------- ------- ------- 591 131 294 (1,394) (524) (1,284) 684 ------- ------- -------- ------- ------- ------- ------- 23,732 7,019 161,405 8,977 16,983 16,633 6,896 (8,537) (7,150) (82,839) (493) (1,324) (1,285) (7,580) ------- ------- -------- ------- ------- ------- ------- 15,195 (131) 78,566 8,484 15,659 15,348 (684) ------- ------- -------- ------- ------- ------- ------- 15,786 0 78,860 7,090 15,135 14,064 0 0 0 0 0 0 0 0 ------- ------- -------- ------- ------- ------- ------- $15,786 $ 0 $ 78,860 $ 7,090 $15,135 $14,064 $ 0 ======= ======= ======== ======= ======= ======= ======= 0 0 0 0 0 0 0 2,340 710 16,122 931 1,816 1,826 710 (831) (710) (8,279) (57) (149) (154) (710) ------- ------- -------- ------- ------- ------- ------- 1,509 0 7,843 874 1,667 1,672 0 ======= ======= ======== ======= ======= ======= ======= $ (30) $ (1) $ 294 $ (14) $ 724 $ (25) $ (1) ======= ======= ======== ======= ======= ======= =======
F-41 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Survivorship Variable Universal Life -------------------------------------------------------------- PIMCO Variable Insurance Trust ----------------------------------------------- Global StocksPlus Bond Real Return Growth and Income Subaccount Subaccount Subaccount Total -------------- --------------- ----------------- -------------- For the period For the period May 29, 2002** April 3, 2002** For the period For the period through through April 3, 2002** ended December 31, December 31, through December December 31, 2002 2002 31, 2002 2002 -------------- --------------- ----------------- -------------- From operations: Net investment income.................. $ 56 $ 445 $ 279 $ 2,172 Net realized gain (loss) on investments 33 744 (1,010) (1,509) Net change in unrealized appreciation (depreciation) of investments........ 317 856 (246) (13,990) ------ -------- ------- --------- Net increase (decrease) in net assets resulting from operations.............. 406 2,045 (977) (13,327) ------ -------- ------- --------- From unit transactions: Net proceeds from the issuance of units 5,331 39,864 27,562 488,803 Net asset value of units redeemed or used to meet contract obligations.... (544) (16,369) (9,218) (173,770) ------ -------- ------- --------- Net increase from unit transactions..... 4,787 23,495 18,344 315,033 ------ -------- ------- --------- Net increase in net assets.............. 5,193 25,540 17,367 301,706 Net assets beginning of period.......... 0 0 0 0 ------ -------- ------- --------- Net assets end of period*............... $5,193 $ 25,540 $17,367 $ 301,706 ====== ======== ======= ========= Unit transactions: Units outstanding beginning of period... 0 0 0 Units issued during the period.......... 507 3,707 3,322 Units redeemed during the period........ (51) (1,488) (1,154) ------ -------- ------- Units outstanding end of period......... 456 2,219 2,168 ====== ======== ======= ---------- * Includes undistributed net investment income of: $ 56 $ 445 $ 279 $ 2,172 ====== ======== ======= =========
** Commencement of operations See notes to financial statements. F-42 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS 1. Organization and Business: MONY Variable Account L (the "Variable Account") is a separate investment account established on November 28, 1990 by MONY Life Insurance Company ("MONY"), under the laws of the State of New York. The Variable Account operates as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). The Variable Account holds assets that are segregated from all of MONY's other assets and, at present, is used to support Flexible Premium Variable Life Insurance policies, which include Variable Life (Strategist), Variable Universal Life (MONYEquity Master, MONY Custom Equity Master, MONY Custom Estate Master and MONY Variable Universal Life) and MONY Survivorship Variable Universal Life. These policies are issued by MONY. For presentation purposes, the information related only to the MONY Survivorship Variable Universal Life Insurance policies is presented here. There are thirty-five MONY Survivorship Variable Universal Life subaccounts available within the Variable Account, each of which invests only in a corresponding portfolio of the MONY Series Fund, Inc. (the "Fund"), the Enterprise Accumulation Trust ("Enterprise"), Alger American Fund, INVESCO Variable Investment Fund, Lord Abbett Series Fund, MFS Variable Insurance Trust, PIMCO Variable Insurance Trust, PBHG Insurance Series Funds, The Universal Institutional Funds, Inc. or Janus Aspen Series (collectively, the "Funds"). The Funds are registered under the 1940 Act as open end, diversified, management investment companies. The Fund and Enterprise are affiliated with MONY. These financial statements should be read in conjunction with the financial statements and footnotes of the Fund, which were distributed by MONY to the Policyholders. 2. Significant Accounting Policies: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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 each of the respective Funds' portfolios is stated at value which is the net asset value of the respective portfolio as reported by such portfolio. Net asset value is based upon market or fair valuations of the securities held in each of the corresponding portfolios of the Funds. For the Money Market Portfolios, the net asset value is based on the amortized cost of the securities held, which approximates market value. Investment Transactions and Investment Income: Investments in the portfolios of the Funds are recorded on the trade date. Realized gains and losses on redemption of investments in the portfolios of the Funds are determined on the identified cost basis. Dividend income and distributions of net realized gains from Portfolios of the Funds are recorded on ex-dividend date. Investment income includes net investment income and distributions of net realized gains received from the respective portfolios of the Funds. Dividends and distributions received are reinvested in additional shares of the respective portfolios of the Funds. Taxes: MONY is currently taxed as a life insurance company and will include the Variable Account's operations in its tax return. MONY does not expect, based on current tax law, to incur any income tax burden upon the earnings or realized gains attributable to the Variable Account. Based on this expectation, no charges are currently being deducted from the Variable Account for Federal income tax purposes. F-43 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 3. Related Party Transactions: MONY is the legal owner of the assets held by the Variable Account. Policy premiums received from MONY by the Variable Account represent gross policy premiums recorded by MONY less deductions retained as compensation for certain sales distribution expenses and premium taxes. The cost of insurance, administration charges, mortality and expense risk charges and, if applicable, the cost of any optional benefits added by riders to the insurance policies are deducted monthly from the cash value of the contract to compensate MONY. A surrender charge may be imposed by MONY when a full or partial surrender is requested by the policyholders. These deductions are treated as contractholder redemptions by the Variable Account. The amount deducted for the MONY Survivorship Variable Universal Life Subaccounts for the period ended December 31, 2002 aggregated $18,435. MONY receives from the Variable Account the amounts deducted for mortality and expense risks at an annual rate of 0.35% of average daily net assets of each of the MONY Survivorship Variable Universal Life subaccounts. MONY Life Insurance Company of America (MONY America), a wholly-owned subsidiary of MONY, acts as investment adviser to the Fund and receives amounts paid by the Fund for those services. Enterprise Capital Management, Inc., a wholly-owned subsidiary of MONY, acts as investment adviser to the portfolios of Enterprise, and it receives amounts paid by Enterprise for those services. MONY and MONY America receive fees directly from certain Funds for maintaining and servicing policyholders' accounts. During the period ended December 31, 2002, MONY received $54 in aggregate from certain Funds in connection with MONY Survivorship Variable Universal Life subaccounts. 4. Investment Transactions: Cost of shares acquired and the proceeds from redemption of shares by each subaccount during the period ended December 31, 2002 were as follows:
Cost of Shares Acquired (Excludes Proceeds from MONY Survivorship Variable Universal Life Subaccounts Reinvestments) Shares Redeemed ----------------------------------------------------- --------------- --------------- Alger American Fund Balanced Portfolio........................... $ 5,220 $ 265 Mid-Cap Growth Portfolio..................... 10,805 537 Enterprise Accumulation Trust Equity Income Portfolio...................... 15,778 8,347 Growth and Income Portfolio.................. 15,051 8,286 Growth Portfolio............................. 3,468 265 Global Socially Responsive Portfolio......... 7,954 358 Multi-Cap Growth Portfolio................... 7,954 344 Small Company Growth Portfolio............... 26,527 1,516 Small Company Value Portfolio................ 14,105 7,987 INVESCO Variable Insurance Fund Financial Services Portfolio................. 7,953 353
F-44 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 4. Investment Transactions: (continued)
Cost of Shares Acquired (Excludes Proceeds from MONY Survivorship Variable Universal Life Subaccounts Reinvestments) Shares Redeemed ----------------------------------------------------- --------------- --------------- Janus Aspen Series Capital Appreciation Portfolio................ $ 11,422 $ 637 Flexible Income Portfolio..................... 10,633 7,317 International Growth Portfolio................ 3,150 331 Lord Abbett Series Funds Bond Debenture Portfolio...................... 938 45 Growth and Income Portfolio................... 6,790 420 Mid-Cap Value Portfolio....................... 5,343 355 MFS Variable Insurance Trust New Discovery Portfolio....................... 11,595 896 Total Return Portfolio........................ 9,828 465 MONY Series Fund, Inc. Government Securities Portfolio............... 23,731 8,561 Long Term Bond Portfolio...................... 7,097 7,229 Money Market Portfolio........................ 161,405 82,911 The Universal Institutional Funds, Inc. Emerging Markets Equity Portfolio............. 8,930 458 U.S. Real Estate Portfolio.................... 16,982 1,341 PBHG Insurance Series Funds Mid-Cap Value Portfolio....................... 16,633 1,306 Select Value Portfolio........................ 7,098 7,783 PIMCO Variable Insurance Trust Global Bond Portfolio......................... 5,331 548 Real Return Portfolio......................... 39,836 16,374 StocksPlus Growth and Income Portfolio........ 27,910 9,594
5. Financial Highlights: For a unit outstanding throughout the period ended December 31, 2002:
At December 31, 2002 For the period ended December 31, 2002 ----------------------- ------------------------------------ Investment Unit Net Assets Income Expense Total MONY Survivorship Variable Universal Life Subaccounts Units Values (000s) Ratio*^ Ratio**^ Return*** ----------------------------------------------------- ----- ------ ---------- ---------- -------- --------- Alger American Fund Balanced Subaccount (1).................. 528 $9.02 $ 5 1.46% 0.35% (9.80)% Mid-Cap Growth Subaccount (2)............ 1,110 7.46 8 0.00 0.35% (25.40)
F-45 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 5. Financial Highlights: (continued)
At December 31, 2002 For the period ended December 31, 2002 ----------------------- ------------------------------------ Investment Unit Net Assets Income Expense Total MONY Survivorship Variable Universal Life Subaccounts Units Values (000s) Ratio*/\ Ratio**/\ Return*** ----------------------------------------------------- ----- ------ ---------- ---------- --------- --------- Enterprise Accumulation Trust Equity Income Subaccount (3).................... 816 $ 8.88 $ 7 2.55% 0.35% (11.20)% Growth and Income Subaccount (4)................ 809 7.91 6 2.18 0.35% (20.90) Growth Subaccount (5)........................... 319 9.44 3 1.75 0.35% (5.60) Global Socially Responsive Subaccount (2)....... 811 8.31 7 0.67 0.35% (16.90) Multi-Cap Growth Subaccount (2)................. 810 7.27 6 0.00 0.35% (27.30) Small Company Growth Subaccount (2)............. 2,865 7.73 22 0.00 0.35% (22.70) Small Company Value Subaccount (1).............. 747 8.50 6 0.89 0.35% (15.00) INVESCO Variable Investment Fund Financial Services Subaccount (2)............... 786 8.34 7 1.16 0.35% (16.60) Janus Aspen Series Capital Appreciation Subaccount (2)............. 1,112 8.74 10 0.51 0.35% (12.60) Flexible Income Subaccount (1).................. 319 10.98 4 3.15 0.35% 9.80 International Growth Subaccount (6)............. 275 7.92 2 1.19 0.35% (20.80) Lord Abbett Series Funds Bond Debenture Subaccount (7)................... 89 10.42 1 6.65 0.35% 4.20 Growth and Income Subaccount (1)................ 708 8.09 6 1.05 0.35% (19.10) Mid-Cap Value Subaccount (7).................... 501 9.71 5 1.63 0.35% (2.90) MFS Variable Insurance Trust New Discovery Subaccount (6).................... 1,203 7.83 9 0.00 0.35% (21.70) Total Return Subaccount (2)..................... 965 9.25 9 0.00 0.35% (7.50) MONY Series Fund, Inc. Government Securities Subaccount (6)............ 1,509 10.46 16 0.00 0.35% 4.60 Long Term Bond Subaccount (8)................... 0 10.76 0 0.00 0.35% 7.60 Money Market Subaccount......................... 7,843 10.05 79 1.42 0.35% 0.50 The Universal Institutional Funds, Inc. Emerging Markets Equity Subaccount (2).......... 874 8.11 7 0.00 0.35% (18.90) U.S. Real Estate Subaccount (6)................. 1,667 9.08 15 7.60 0.35% (9.20) PBHG Insurance Series Funds Mid Cap Value Subaccount (6).................... 1,672 8.41 14 0.00 0.35% (15.90) Select Value Subaccount (8)..................... 0 10.18 0 0.00 0.35% 1.80 PIMCO Variable Insurance Trust Global Bond Subaccount (6)...................... 456 11.37 5 2.73 0.35% 13.70 Real Return Subaccount (1)...................... 2,219 11.51 26 3.94 0.35% 15.10 StocksPlus Growth and Income Subaccount (1)..... 2,168 8.01 17 3.31 0.35% (19.90)
F-46 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) ---------- * This ratio represents the amount of dividend income, excluding distributions from net realized gains, received by the subaccount from the underlying fund, net of investment advisory fees assessed by the underlying fund's investment adviser and other expenses of the underlying fund, divided by the average net assets of the subaccount. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the net asset value per Unit. The recognition of dividend income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. ** This ratio represents the annual contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratio includes only those expenses that result in a direct reduction to net asset value per Unit. Charges made directly to contractholder accounts by redemption of Units and expenses of the respective underlying fund are excluded from this ratio. *** Represents the total return for the period indicated, including changes in the value of the underlying fund, and reflects deductions for all items included in the Expense Ratio. The Total Return does not include any expenses assessed through the redemption of Units; the Total Return would have been lower had such expenses been included in the calculation. Total returns for periods less than one year are not annualized. ****Commencement of operations /\ Annualized (1) For the period April 3, 2002**** through December 31, 2002 (2) For the period May 2, 2002**** through December 31, 2002 (3) For the period July 5, 2002**** through December 31, 2002 (4) For the period May 5, 2002**** through December 31, 2002 (5) For the period September 10, 2002**** through December 31, 2002 (6) For the period May 29, 2002**** through December 31, 2002 (7) For the period August 21, 2002**** through December 31, 2002 (8) For the period August 5, 2002**** through December 31, 2002 F-47 [THIS PAGE INTENTIONALLY LEFT BLANK] F-48 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of MONY Life Insurance Company and the Contractholders of MONY Variable Account L -- MONY Custom Equity Master In our opinion, the accompanying statements of assets and liabilities 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 each of MONY Custom Equity Master's Subaccounts of MONY Variable Account L at December 31, 2002, and the results of each of their operations, the changes in each of their net assets and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "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 of America, 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 investments at December 31, 2002 by correspondence with the underlying funds' transfer agents, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York April 8, 2003 F-49 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES December 31, 2002
MONY Custom Equity Master --------------------------------------------------------------------- Enterprise MONY Series Fund, Inc. Accumulation Trust --------------------------------------------- ----------------------- Intermediate Long Term Government Money Small Company Term Bond Bond Securities Market Equity Value Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ---------- ---------- ---------- ---------- ------------- ASSETS Shares held in respective Funds....................... 11,820 11,622 18,118 1,041,173 52,361 22,655 ======== ======== ======== ========== ========= ======== Investments at cost........... $132,042 $155,328 $207,425 $1,041,173 $ 911,680 $445,415 ======== ======== ======== ========== ========= ======== Investments in respective Funds, at net asset value... $139,827 $168,860 $214,154 $1,041,173 $ 640,894 $388,752 Amount due from MONY.......... 4 3 14 0 74 52 Amount due from respective Funds....................... 38 4 16 40 2,586 47 -------- -------- -------- ---------- --------- -------- Total assets........... 139,869 168,867 214,184 1,041,213 643,554 388,851 -------- -------- -------- ---------- --------- -------- LIABILITIES Amount due to MONY............ 116 98 137 624 2,969 269 Amount due to respective Funds 4 3 14 0 74 52 -------- -------- -------- ---------- --------- -------- Total liabilities...... 120 101 151 624 3,043 321 -------- -------- -------- ---------- --------- -------- Net assets.................... $139,749 $168,766 $214,033 $1,040,589 $ 640,511 $388,530 ======== ======== ======== ========== ========= ======== Net assets consist of: Contractholders' net payments................... $126,355 $148,476 $202,340 $1,013,454 $ 963,642 $418,553 Undistributed net investment income.......... 4,531 5,621 3,263 27,135 99,885 57,151 Accumulated net realized gain (loss) on investments. 1,078 1,137 1,701 0 (152,230) (30,511) Net unrealized appreciation (depreciation) of investments................ 7,785 13,532 6,729 0 (270,786) (56,663) -------- -------- -------- ---------- --------- -------- Net assets.................... $139,749 $168,766 $214,033 $1,040,589 $ 640,511 $388,530 ======== ======== ======== ========== ========= ======== Number of units outstanding*.. 11,293 12,772 17,384 96,370 132,826 38,844 -------- -------- -------- ---------- --------- -------- Net asset value per unit outstanding*................ $ 12.37 $ 13.21 $ 12.31 $ 10.80 $ 4.82 $ 10.00 ======== ======== ======== ========== ========= ========
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-50
MONY Custom Equity Master ---------------------------------------------------------------------------------------------- Enterprise Accumulation Trust ---------------------------------------------------------------------------------------------- International High Yield Growth and Small Company Equity Capital Managed Growth Bond Growth Income Growth Income Appreciation Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------- ---------- ---------- ---------- ------------- ---------- ------------ 21,784 34,157 40,679 171,492 134,165 52,438 29,052 65,586 ======== ======== ======== ========= ========= ======== ======== ======== $426,340 $149,632 $173,132 $ 849,103 $ 680,044 $380,623 $142,329 $373,727 ======== ======== ======== ========= ========= ======== ======== ======== $332,858 $118,185 $164,341 $ 682,539 $ 529,952 $313,577 $122,597 $310,224 21 2 0 90 42 25 11 14 12 13 11 51 6,453 1,374 14 29 -------- -------- -------- --------- --------- -------- -------- -------- 332,891 118,200 164,352 682,680 536,447 314,976 122,622 310,267 -------- -------- -------- --------- --------- -------- -------- -------- 198 81 103 446 6,760 1,553 83 209 21 2 0 90 42 25 11 14 -------- -------- -------- --------- --------- -------- -------- -------- 219 83 103 536 6,802 1,578 94 223 -------- -------- -------- --------- --------- -------- -------- -------- $332,672 $118,117 $164,249 $ 682,144 $ 529,645 $313,398 $122,528 $310,044 ======== ======== ======== ========= ========= ======== ======== ======== $422,203 $161,815 $160,848 $ 885,426 $ 714,565 $393,362 $144,770 $405,549 24,344 11,327 14,514 607 6,014 6,368 1,355 1,950 (20,393) (23,578) (2,322) (37,325) (40,842) (19,286) (3,865) (33,952) (93,482) (31,447) (8,791) (166,564) (150,092) (67,046) (19,732) (63,503) -------- -------- -------- --------- --------- -------- -------- -------- $332,672 $118,117 $164,249 $ 682,144 $ 529,645 $313,398 $122,528 $310,044 ======== ======== ======== ========= ========= ======== ======== ======== 46,292 22,624 15,634 105,572 81,345 42,606 15,612 48,771 -------- -------- -------- --------- --------- -------- -------- -------- $ 7.19 $ 5.22 $ 10.50 $ 6.46 $ 6.51 $ 7.36 $ 7.85 $ 6.36 ======== ======== ======== ========= ========= ======== ======== ========
F-51 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONY Custom Equity Master ----------------------------------------------------------------- Enterprise Accumulation Trust ----------------------------------------------------------------- Multi-Cap Emerging Worldwide Mid-Cap Total Growth Balanced Countries Growth Growth Return Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------- ---------- ---------- ---------- ---------- ASSETS Shares held in respective Funds....................... 62,868 22,757 542 1,273 5,421 21 ========= ======== ====== ======= ======= ====== Investments at cost........... $ 487,310 $104,854 $4,752 $10,064 $35,945 $ 216 ========= ======== ====== ======= ======= ====== Investments in respective Funds, at net asset value... $ 346,401 $ 96,489 $4,286 $ 8,553 $28,733 $ 219 Amount due from MONY.......... 57 26 0 0 4 0 Amount due from respective Funds....................... 27 15 0 0 3 0 --------- -------- ------ ------- ------- ------ Total assets........... 346,485 96,530 4,286 8,553 28,740 219 --------- -------- ------ ------- ------- ------ LIABILITIES Amount due to MONY............ 227 68 3 5 20 0 Amount due to respective Funds 57 26 0 0 4 0 --------- -------- ------ ------- ------- ------ Total liabilities...... 284 94 3 5 24 0 --------- -------- ------ ------- ------- ------ Net assets.................... $ 346,201 $ 96,436 $4,283 $ 8,548 $28,716 $ 219 ========= ======== ====== ======= ======= ====== Net assets consist of: Contractholders' net payments................... $ 567,657 $105,381 $4,796 $10,303 $37,171 $ 210 Undistributed net investment income (loss)... (3,058) 1,856 (12) (38) (144) 6 Accumulated net realized gain (loss) on investments. (77,489) (2,436) (35) (206) (1,099) 0 Net unrealized appreciation (depreciation) of investments................ (140,909) (8,365) (466) (1,511) (7,212) 3 --------- -------- ------ ------- ------- ------ Net assets.................... $ 346,201 $ 96,436 $4,283 $ 8,548 $28,716 $ 219 ========= ======== ====== ======= ======= ====== Number of units outstanding*.. 83,320 11,429 537 1,298 5,215 21 --------- -------- ------ ------- ------- ------ Net asset value per unit outstanding*................ $ 4.16 $ 8.44 $ 7.96 $ 6.59 $ 5.51 $10.46 ========= ======== ====== ======= ======= ======
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-52
MONY Custom Equity Master ------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Funds Janus Aspen Series ----------------------------------------- -------------------------------------------- Dreyfus Dreyfus Socially VIP III Stock Responsible VIP VIP II Growth Aggressive Capital Worldwide Index Growth Growth Contrafund Opportunities Growth Balanced Appreciation Growth Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------------- ---------- ---------- ------------- ---------- ---------- ------------ ---------- 33,615 5,247 17,384 20,717 6,926 28,383 16,329 18,940 23,280 ========= ======== ========= ======== ======== ========= ======== ======== ========= $ 938,896 $129,677 $ 544,870 $415,980 $ 97,899 $ 586,839 $363,292 $397,506 $ 659,528 ========= ======== ========= ======== ======== ========= ======== ======== ========= $ 755,334 $ 99,160 $ 405,745 $373,730 $ 81,039 $ 449,590 $336,204 $328,985 $ 490,036 87 0 0 11 4 8 29 9 6 73 1,259 1,280 23 8 51 15 15 46 --------- -------- --------- -------- -------- --------- -------- -------- --------- 755,494 100,419 407,025 373,764 81,051 449,649 336,248 329,009 490,088 --------- -------- --------- -------- -------- --------- -------- -------- --------- 511 1,318 1,517 232 55 306 205 205 324 87 0 0 11 4 8 29 9 6 --------- -------- --------- -------- -------- --------- -------- -------- --------- 598 1,318 1,517 243 59 314 234 214 330 --------- -------- --------- -------- -------- --------- -------- -------- --------- $ 754,896 $ 99,101 $ 405,508 $373,521 $ 80,992 $ 449,335 $336,014 $328,795 $ 489,758 ========= ======== ========= ======== ======== ========= ======== ======== ========= $ 987,737 $145,457 $ 620,059 $443,552 $106,035 $ 736,450 $364,344 $450,645 $ 739,543 17,270 (243) 8,408 5,384 40 (1,007) 12,803 3,231 5,248 (66,549) (15,596) (83,834) (33,165) (8,223) (148,859) (14,045) (56,560) (85,541) (183,562) (30,517) (139,125) (42,250) (16,860) (137,249) (27,088) (68,521) (169,492) --------- -------- --------- -------- -------- --------- -------- -------- --------- $ 754,896 $ 99,101 $ 405,508 $373,521 $ 80,992 $ 449,335 $336,014 $328,795 $ 489,758 ========= ======== ========= ======== ======== ========= ======== ======== ========= 119,048 19,929 79,727 49,502 13,189 141,118 38,530 60,226 103,472 --------- -------- --------- -------- -------- --------- -------- -------- --------- $ 6.34 $ 4.97 $ 5.09 $ 7.55 $ 6.14 $ 3.18 $ 8.72 $ 5.46 $ 4.73 ========= ======== ========= ======== ======== ========= ======== ======== =========
F-53 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONY Custom Equity Master --------------------------------------------------------------------------------- The Alger Universal PIMCO American Lord Abbett Institutional Variable Fund Series Funds Funds, Inc. Insurance Trust ---------- -------------------- ------------- ---------------------- Mid-Cap Growth and Mid-Cap U.S. Global Growth Income Value Real Estate Bond Real Return Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Total ---------- ---------- ---------- ------------- ---------- ----------- ----------- ASSETS Shares held in respective Funds....................... 705 444 2,318 1,232 1,810 4,673 ======= ====== ======= ======= ======= ======= Investments at cost........... $10,809 $8,731 $33,438 $14,782 $19,495 $53,785 $10,986,661 ======= ====== ======= ======= ======= ======= =========== Investments in respective Funds, at net asset value... $ 8,782 $8,368 $32,134 $13,954 $21,161 $55,608 $ 9,112,444 ------- ------ ------- ------- ------- ------- ----------- Amount due from MONY.......... 0 0 4 0 0 0 597 Amount due from respective Funds....................... 0 0 0 0 0 0 13,503 ------- ------ ------- ------- ------- ------- ----------- Total assets........... 8,782 8,368 32,138 13,954 21,161 55,608 9,126,544 ------- ------ ------- ------- ------- ------- ----------- LIABILITIES Amount due to MONY............ 5 5 18 8 12 31 18,721 Amount due to respective Funds 0 0 4 0 0 0 597 ------- ------ ------- ------- ------- ------- ----------- Total liabilities...... 5 5 22 8 12 31 19,318 ------- ------ ------- ------- ------- ------- ----------- Net assets.................... $ 8,777 $8,363 $32,116 $13,946 $21,149 $55,577 $ 9,107,226 ======= ====== ======= ======= ======= ======= =========== Net assets consist of: Contractholders' net payments................... $10,917 $8,766 $33,472 $14,167 $19,149 $53,014 $11,620,183 Undistributed net investment income (loss)... (34) 32 99 665 278 629 315,478 Accumulated net realized gain (loss) on investments. (79) (72) (151) (58) 56 111 (954,218) Net unrealized appreciation (depreciation) of investments................ (2,027) (363) (1,304) (828) 1,666 1,823 (1,874,217) ------- ------ ------- ------- ------- ------- ----------- Net assets.................... $ 8,777 $8,363 $32,116 $13,946 $21,149 $55,577 $ 9,107,226 ======= ====== ======= ======= ======= ======= =========== Number of units outstanding*.. 1,148 1,005 3,695 1,536 1,866 4,960 ------- ------ ------- ------- ------- ------- Net asset value per unit outstanding*................ $ 7.64 $ 8.32 $ 8.69 $ 9.08 $ 11.33 $ 11.20 ======= ====== ======= ======= ======= =======
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-54 [THIS PAGE INTENTIONALLY LEFT BLANK] F-55 MONY Variable Account L STATEMENT OF OPERATIONS For the year ended December 31, 2002
MONY Custom Equity Master -------------------------------------------------------------------------- MONY Series Fund, Inc. Enterprise Accumulation Trust -------------------------------------------- ---------------------------- Intermediate Long Term Government Money Small Company Term Bond Bond Securities Market Equity Value Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ---------- ---------- ---------- ---------- ------------- Dividend income............... $ 4,388 $ 5,408 $ 3,799 $15,715 $ 0 $ 1,404 Distribution from net realized gains.............. 0 0 0 0 0 10,605 Mortality and expense risk charges..................... (680) (756) (941) (5,650) (3,413) (1,911) ------- ------- ------- ------- --------- -------- Net investment income (loss).. 3,708 4,652 2,858 10,065 (3,413) 10,098 ------- ------- ------- ------- --------- -------- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ 568 709 1,297 0 (55,839) (18,089) Net change in unrealized appreciation (depreciation) of investments................ 6,169 12,853 5,984 0 (165,340) (31,375) ------- ------- ------- ------- --------- -------- Net realized and unrealized gain (loss) on investments.. 6,737 13,562 7,281 0 (221,179) (49,464) ------- ------- ------- ------- --------- -------- Net increase (decrease) in net assets resulting from operations.................. $10,445 $18,214 $10,139 $10,065 $(224,592) $(39,366) ======= ======= ======= ======= ========= ========
See notes to financial statements. F-56
MONY Custom Equity Master ---------------------------------------------------------------------------------------------- Enterprise Accumulation Trust ---------------------------------------------------------------------------------------------- International High Yield Growth and Small Company Equity Capital Managed Growth Bond Growth Income Growth Income Appreciation Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------- ---------- ---------- ---------- ------------- ---------- ------------ $ 3,095 $ 803 $11,604 $ 2,751 $ 6,447 $ 0 $ 1,447 $ 0 0 0 0 0 0 0 0 0 (1,645) (608) (752) (3,562) (2,786) (1,640) (601) (1,659) -------- -------- ------- --------- --------- -------- -------- -------- 1,450 195 10,852 (811) 3,661 (1,640) 846 (1,659) -------- -------- ------- --------- --------- -------- -------- -------- (10,527) (10,444) (2,008) (17,507) (24,837) (8,667) (2,863) (10,517) (62,457) (14,653) (7,004) (158,204) (134,560) (74,921) (16,411) (46,727) -------- -------- ------- --------- --------- -------- -------- -------- (72,984) (25,097) (9,012) (175,711) (159,397) (83,588) (19,274) (57,244) -------- -------- ------- --------- --------- -------- -------- -------- $(71,534) $(24,902) $ 1,840 $(176,522) $(155,736) $(85,228) $(18,428) $(58,903) ======== ======== ======= ========= ========= ======== ======== ========
F-57 MONY Variable Account L STATEMENT OF OPERATIONS (continued)
MONY Custom Equity Master -------------------------------------------------------------------------------- Enterprise Accumulation Trust -------------------------------------------------------------------------------- Multi-Cap Emerging Worldwide Mid-Cap Growth Balanced Countries Growth Growth Total Return Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------ ------------ ------------ ------------ --------------- For the period For the year For the year For the year For the year For the year June 12, 2002** ended ended ended ended ended through December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------ ------------ ------------ --------------- Dividend income............... $ 0 $ 1,714 $ 6 $ 0 $ 0 $3 Distribution from net realized gains.............. 0 0 0 0 0 3 Mortality and expense risk charges..................... (2,039) (444) (16) (35) (135) 0 --------- -------- ----- ------- ------- -- Net investment income (loss).. (2,039) 1,270 (10) (35) (135) 6 --------- -------- ----- ------- ------- -- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ (33,783) (1,712) 5 (108) (806) 0 Net change in unrealized appreciation (depreciation) of investments................ (127,114) (9,419) (618) (1,641) (8,113) 3 --------- -------- ----- ------- ------- -- Net realized and unrealized gain (loss) on investments.. (160,897) (11,131) (613) (1,749) (8,919) 3 --------- -------- ----- ------- ------- -- Net increase (decrease) in net assets resulting from operations.................. $(162,936) $ (9,861) $(623) $(1,784) $(9,054) $9 ========= ======== ===== ======= ======= ==
** Commencement of operations See notes to financial statements. F-58
MONY Custom Equity Master --------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Funds Janus Aspen Series --------------------------------------------- -------------------------------------- Dreyfus Dreyfus Stock Socially VIP II VIP III Aggressive Capital Index Responsible Growth VIP Growth Contrafund Growth Opportunities Growth Balanced Appreciation Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------------ ------------ ------------ -------------------- ------------ ------------ ------------ For the year For the year For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 2002 ------------ ------------------ ------------ ------------ -------------------- ------------ ------------ ------------ $ 10,204 $ 265 $ 534 $ 2,301 $ 551 $ 0 $ 7,968 $ 1,915 0 0 0 0 0 0 0 0 (3,897) (509) (2,271) (1,990) (411) (2,264) (1,632) (1,780) --------- -------- --------- -------- -------- --------- -------- -------- 6,307 (244) (1,737) 311 140 (2,264) 6,336 135 --------- -------- --------- -------- -------- --------- -------- -------- (34,665) (7,099) (37,715) (12,307) (3,020) (53,423) (7,684) (20,138) (154,812) (24,802) (115,214) (28,488) (15,805) (79,345) (20,090) (36,615) --------- -------- --------- -------- -------- --------- -------- -------- (189,477) (31,901) (152,929) (40,795) (18,825) (132,768) (27,774) (56,753) --------- -------- --------- -------- -------- --------- -------- -------- $(183,170) $(32,145) $(154,666) $(40,484) $(18,685) $(135,032) $(21,438) $(56,618) ========= ======== ========= ======== ======== ========= ======== ========
Worldwide Growth Subaccount ------------ For the year ended December 31, 2002 ------------ $ 4,827 0 (2,614) --------- 2,213 --------- (31,051) (115,176) --------- (146,227) --------- $(144,014) ========= F-59 MONY Variable Account L STATEMENT OF OPERATIONS (continued)
MONY Custom Equity Master ------------------------------------------------------------------------------------------ Alger The Universal American Institutional Fund Lord Abbett Series Funds Funds, Inc. PIMCO Variable Insurance Trust -------------- ---------------------------- -------------- ---------------------------- Mid-Cap Growth and U.S. Growth Income Mid-Cap Value Real Estate Global Bond Real Return Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount -------------- -------------- -------------- -------------- -------------- -------------- For the period For the period For the period For the period For the period For the period May 06, 2002** May 31, 2002** May 06, 2002** May 31, 2002** May 31, 2002** May 06, 2002** through through through through through through December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 -------------- -------------- -------------- -------------- -------------- -------------- Dividend income............... $ 0 $ 50 $ 181 $ 442 $ 252 $ 623 Distribution from net realized gains.............. 0 1 0 258 88 107 Mortality and expense risk charges..................... (34) (19) (82) (35) (62) (101) ------- ----- ------- ----- ------ ------ Net investment income (loss).. (34) 32 99 665 278 629 ------- ----- ------- ----- ------ ------ Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ (79) (72) (151) (58) 56 111 Net change in unrealized appreciation (depreciation) of investments................ (2,027) (363) (1,304) (828) 1,666 1,823 ------- ----- ------- ----- ------ ------ Net realized and unrealized gain (loss) on investments.. (2,106) (435) (1,455) (886) 1,722 1,934 ------- ----- ------- ----- ------ ------ Net increase (decrease) in net assets resulting from operations.................. $(2,140) $(403) $(1,356) $(221) $2,000 $2,563 ======= ===== ======= ===== ====== ======
Total ----------- Dividend income............... $ 88,697 Distribution from net realized gains.............. 11,062 Mortality and expense risk charges..................... (46,974) ----------- Net investment income (loss).. 52,785 ----------- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ (402,423) Net change in unrealized appreciation (depreciation) of investments................ (1,424,928) ----------- Net realized and unrealized gain (loss) on investments.. (1,827,351) ----------- Net increase (decrease) in net assets resulting from operations.................. $(1,774,566) ===========
** Commencement of operations See notes to financial statements. F-60 [THIS PAGE INTENTIONALLY LEFT BLANK] F-61 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS
MONY Custom Equity Master ---------------------------------------------------------------------------- MONY Series Fund, Inc. ---------------------------------------------------------------------------- Intermediate Long Term Government Term Bond Bond Securities Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ From operations: Net investment income (loss). $ 3,708 $ 836 $ 4,652 $ 976 $ 2,858 $ 409 Net realized gain (loss) on investments................ 568 481 709 412 1,297 383 Net change in unrealized appreciation (depreciation) of investments................ 6,169 1,137 12,853 301 5,984 594 -------- -------- -------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations................... 10,445 2,454 18,214 1,689 10,139 1,386 -------- -------- -------- -------- -------- -------- From unit transactions: Net proceeds from the issuance of units.......... 104,183 54,847 126,307 65,177 189,064 93,798 Net asset value of units redeemed or used to meet contract obligations....... (36,129) (12,148) (35,923) (17,053) (70,155) (16,515) -------- -------- -------- -------- -------- -------- Net increase (decrease) from unit transactions............ 68,054 42,699 90,384 48,124 118,909 77,283 -------- -------- -------- -------- -------- -------- Net increase (decrease) in net assets................... 78,499 45,153 108,598 49,813 129,048 78,669 Net assets beginning of period 61,250 16,097 60,168 10,355 84,985 6,316 -------- -------- -------- -------- -------- -------- Net assets end of period*..... $139,749 $ 61,250 $168,766 $ 60,168 $214,033 $ 84,985 ======== ======== ======== ======== ======== ======== Unit transactions: Units outstanding beginning of period.................... 5,383 1,530 5,166 942 7,316 577 Units issued during the period 9,741 4,957 11,093 5,723 16,047 8,191 Units redeemed during the period....................... (3,831) (1,104) (3,487) (1,499) (5,979) (1,452) -------- -------- -------- -------- -------- -------- Units outstanding end of period....................... 11,293 5,383 12,772 5,166 17,384 7,316 ======== ======== ======== ======== ======== ======== ---------- * Includes undistributed net investment income of: $ 4,531 $ 823 $ 5,621 $ 969 $ 3,263 $ 405 ======== ======== ======== ======== ======== ========
See notes to financial statements. F-62
MONY Custom Equity Master ------------------------------------------------------------------------------------------------------ MONY Series Fund, Inc. Enterprise Accumulation Trust ------------------------ ---------------------------------------------------------------------------- Small Company Money Market Equity Value Managed Subaccount Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 10,065 $ 16,021 $ (3,413) $ 89,438 $ 10,098 $ 42,604 $ 1,450 $ 18,358 0 0 (55,839) (89,824) (18,089) (10,977) (10,527) (7,992) 0 0 (165,340) (68,120) (31,375) (22,560) (62,457) (32,257) ---------- ---------- --------- --------- --------- -------- -------- -------- 10,065 16,021 (224,592) (68,506) (39,366) 9,067 (71,534) (21,891) ---------- ---------- --------- --------- --------- -------- -------- -------- (148,738) 1,828,369 372,048 614,166 295,382 237,430 170,342 226,381 (121,785) (584,681) (150,431) (125,139) (122,150) (53,014) (58,173) (40,330) ---------- ---------- --------- --------- --------- -------- -------- -------- (270,523) 1,243,688 221,617 489,027 173,232 184,416 112,169 186,051 ---------- ---------- --------- --------- --------- -------- -------- -------- (260,458) 1,259,709 (2,975) 420,521 133,866 193,483 40,635 164,160 1,301,047 41,338 643,486 222,965 254,664 61,181 292,037 127,877 ---------- ---------- --------- --------- --------- -------- -------- -------- $1,040,589 $1,301,047 $ 640,511 $ 643,486 $ 388,530 $254,664 $332,672 $292,037 ========== ========== ========= ========= ========= ======== ======== ======== 121,626 3,997 93,665 26,254 22,978 5,789 31,845 12,345 (14,438) 172,939 68,153 85,417 28,247 22,117 23,023 23,812 (10,818) (55,310) (28,992) (18,006) (12,381) (4,928) (8,576) (4,312) ---------- ---------- --------- --------- --------- -------- -------- -------- 96,370 121,626 132,826 93,665 38,844 22,978 46,292 31,845 ========== ========== ========= ========= ========= ======== ======== ======== $ 27,135 $ 17,070 $ 99,885 $ 103,298 $ 57,151 $ 47,053 $ 24,344 $ 22,894 ========== ========== ========= ========= ========= ======== ======== ========
F-63 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Custom Equity Master ---------------------------------------------------------------------------- Enterprise Accumulation Trust ---------------------------------------------------------------------------- High Yield International Bond Growth Growth Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ From operations: Net investment income (loss). $ 195 $ 8,494 $ 10,852 $ 3,504 $ (811) $ 832 Net realized loss on investments................ (10,444) (12,259) (2,008) (279) (17,507) (18,278) Net change in unrealized appreciation (depreciation) of investments................ (14,653) (13,112) (7,004) (1,717) (158,204) (12,826) -------- -------- -------- -------- --------- --------- Net increase (decrease) in net assets resulting from operations................... (24,902) (16,877) 1,840 1,508 (176,522) (30,272) -------- -------- -------- -------- --------- --------- From unit transactions: Net proceeds from the issuance of units.......... 79,488 86,356 115,592 76,810 417,458 515,492 Net asset value of units redeemed or used to meet contract obligations....... (29,079) (24,672) (33,251) (12,573) (153,222) (117,820) -------- -------- -------- -------- --------- --------- Net increase from unit transactions................. 50,409 61,684 82,341 64,237 264,236 397,672 -------- -------- -------- -------- --------- --------- Net increase in net assets.... 25,507 44,807 84,181 65,745 87,714 367,400 Net assets beginning of period 92,610 47,803 80,068 14,323 594,430 227,030 -------- -------- -------- -------- --------- --------- Net assets end of period*..... $118,117 $ 92,610 $164,249 $ 80,068 $ 682,144 $ 594,430 ======== ======== ======== ======== ========= ========= Unit transactions: Units outstanding beginning of period.................... 14,206 5,274 7,695 1,453 70,201 23,359 Units issued during the period 13,854 12,354 11,819 7,462 58,110 60,795 Units redeemed during the period....................... (5,436) (3,422) (3,880) (1,220) (22,739) (13,953) -------- -------- -------- -------- --------- --------- Units outstanding end of period....................... 22,624 14,206 15,634 7,695 105,572 70,201 ======== ======== ======== ======== ========= ========= ---------- * Includes undistributed net investment income of: $ 11,327 $ 11,132 $ 14,514 $ 3,662 $ 607 $ 1,418 ======== ======== ======== ======== ========= =========
See notes to financial statements. F-64
MONY Custom Equity Master ------------------------------------------------------------------------------------------------------ Enterprise Accumulation Trust ------------------------------------------------------------------------------------------------------ Growth and Small Company Equity Capital Income Growth Income Appreciation Subaccount Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 3,661 $ 2,339 $ (1,640) $ 7,842 $ 846 $ 511 $ (1,659) $ 715 (24,837) (15,933) (8,667) (10,901) (2,863) (1,072) (10,517) (22,752) (134,560) (14,041) (74,921) 9,613 (16,411) (4,337) (46,727) (7,298) --------- --------- -------- -------- -------- -------- -------- -------- (155,736) (27,635) (85,228) 6,554 (18,428) (4,898) (58,903) (29,335) --------- --------- -------- -------- -------- -------- -------- -------- 371,505 521,272 201,240 238,098 84,394 80,770 203,522 223,818 (161,896) (105,992) (89,189) (54,202) (30,063) (18,589) (91,952) (54,654) --------- --------- -------- -------- -------- -------- -------- -------- 209,609 415,280 112,051 183,896 54,331 62,181 111,570 169,164 --------- --------- -------- -------- -------- -------- -------- -------- 53,873 387,645 26,823 190,450 35,903 57,283 52,667 139,829 475,772 88,127 286,575 96,125 86,625 29,342 257,377 117,548 --------- --------- -------- -------- -------- -------- -------- -------- $ 529,645 $ 475,772 $313,398 $286,575 $122,528 $ 86,625 $310,044 $257,377 ========= ========= ======== ======== ======== ======== ======== ======== 53,806 8,752 29,439 9,464 9,356 2,818 33,465 12,316 50,826 56,790 24,798 25,927 9,862 8,493 28,041 28,080 (23,287) (11,736) (11,631) (5,952) (3,606) (1,955) (12,735) (6,931) --------- --------- -------- -------- -------- -------- -------- -------- 81,345 53,806 42,606 29,439 15,612 9,356 48,771 33,465 ========= ========= ======== ======== ======== ======== ======== ======== $ 6,014 $ 2,353 $ 6,368 $ 8,008 $ 1,355 $ 509 $ 1,950 $ 3,609 ========= ========= ======== ======== ======== ======== ======== ========
F-65 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Custom Equity Master --------------------------------------------------------------------------------- Enterprise Accumulation Trust --------------------------------------------------------------------------------- Multi-Cap Emerging Growth Balanced Countries Subaccount Subaccount Subaccount ------------------------ ------------------------ ----------------------------- For the year For the year For the year For the year For the year For the period ended ended ended ended ended June 8, 2001** December 31, December 31, December 31, December 31, December 31, through 2002 2001 2002 2001 2002 December 31, 2001 ------------ ------------ ------------ ------------ ------------ ----------------- From operations: Net investment income (loss). $ (2,039) $ (907) $ 1,270 $ 569 $ (10) $ (2) Net realized gain (loss) on investments................ (33,783) (41,378) (1,712) (612) 5 (40) Net change in unrealized appreciation (depreciation) of investments................ (127,114) 9,788 (9,419) 825 (618) 152 --------- -------- -------- -------- ------- ------ Net increase (decrease) in net assets resulting from operations................... (162,936) (32,497) (9,861) 782 (623) 110 --------- -------- -------- -------- ------- ------ From unit transactions: Net proceeds from the issuance of units.......... 274,466 343,187 78,731 76,777 4,444 1,757 Net asset value of units redeemed or used to meet contract obligations....... (150,728) (77,595) (33,143) (23,620) (1,169) (236) --------- -------- -------- -------- ------- ------ Net increase from unit transactions................. 123,738 265,592 45,588 53,157 3,275 1,521 --------- -------- -------- -------- ------- ------ Net increase (decrease) in net assets................... (39,198) 233,095 35,727 53,939 2,652 1,631 Net assets beginning of period 385,399 152,304 60,709 6,770 1,631 0 --------- -------- -------- -------- ------- ------ Net assets end of period*..... $ 346,201 $385,399 $ 96,436 $ 60,709 $ 4,283 $1,631 ========= ======== ======== ======== ======= ====== Unit transactions: Units outstanding beginning of period.................... 60,270 19,707 6,380 682 169 0 Units issued during the period 53,725 52,586 9,057 8,226 511 197 Units redeemed during the period....................... (30,675) (12,023) (4,008) (2,528) (143) (28) --------- -------- -------- -------- ------- ------ Units outstanding end of period....................... 83,320 60,270 11,429 6,380 537 169 ========= ======== ======== ======== ======= ====== ---------- * Includes undistributed net investment income (loss) of: $ (3,058) $ (1,019) $ 1,856 $ 586 $ (12) $ (2) ========= ======== ======== ======== ======= ======
** Commencement of operations See notes to financial statements. F-66
MONY Custom Equity Master --------------------------------------------------------------------------------------------------------- Enterprise Accumulation Trust ------------------------------------------------------------------------------ Worldwide Mid-Cap Total Dreyfus Growth Growth Return Stock Index Subaccount Subaccount Subaccount Subaccount ----------------------------- ----------------------------- ----------------- ------------------------ For the year For the period For the year For the period For the period For the year For the year ended June 8, 2001** ended June 8, 2001** June 12, 2002** ended ended December 31, through December 31, through through December 31, December 31, 2002 December 31, 2001 2002 December 31, 2001 December 31, 2002 2002 2001 ------------ ----------------- ------------ ----------------- ----------------- ------------ ------------ $ (35) $ (3) $ (135) $ (9) $ 6 $ 6,307 $ 7,130 (108) (98) (806) (293) 0 (34,665) (30,637) (1,641) 130 (8,113) 901 3 (154,812) (15,177) ------- ------ ------- ------- ---- --------- --------- (1,784) 29 (9,054) 599 9 (183,170) (38,684) ------- ------ ------- ------- ---- --------- --------- 9,275 4,723 34,891 12,526 244 497,379 587,939 (3,013) (682) (8,888) (1,358) (34) (204,778) (123,130) ------- ------ ------- ------- ---- --------- --------- 6,262 4,041 26,003 11,168 210 292,601 464,809 ------- ------ ------- ------- ---- --------- --------- 4,478 4,070 16,949 11,767 219 109,431 426,125 4,070 0 11,767 0 0 645,465 219,340 ------- ------ ------- ------- ---- --------- --------- $ 8,548 $4,070 $28,716 $11,767 $219 $ 754,896 $ 645,465 ======= ====== ======= ======= ==== ========= ========= 463 0 1,466 0 0 78,584 23,366 1,225 542 5,261 1,643 24 70,821 69,968 (390) (79) (1,512) (177) (3) (30,357) (14,750) ------- ------ ------- ------- ---- --------- --------- 1,298 463 5,215 1,466 21 119,048 78,584 ======= ====== ======= ======= ==== ========= ========= $ (38) $ (3) $ (144) $ (9) $ 6 $ 17,270 $ 10,963 ======= ====== ======= ======= ==== ========= =========
Dreyfus Socially Responsible Growth Subaccount ------------------------ For the year For the year ended ended December 31, December 31, 2002 2001 ------------ ------------ $ (244) $ (140) (7,099) (8,248) (24,802) (3,277) -------- -------- (32,145) (11,665) -------- -------- 79,660 91,828 (31,107) (18,864) -------- -------- 48,553 72,964 -------- -------- 16,408 61,299 82,693 21,394 -------- -------- $ 99,101 $ 82,693 ======== ======== 11,748 2,344 14,024 11,940 (5,843) (2,536) -------- -------- 19,929 11,748 ======== ======== $ (243) $ 1 ======== ========
F-67 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
Mony Custom Equity Master - ---------------------------------------------------------------------------- Fidelity Variable Insurance Products Funds ---------------------------------------------------------------------------- VIP VIP II VIP III Growth Contrafund Growth Opportunities Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ From operations: Net investment income (loss). $ (1,737) $ 10,264 $ 311 $ 5,232 $ 140 $ (77) Net realized loss on investments................ (37,715) (45,170) (12,307) (20,592) (3,020) (4,908) Net change in unrealized appreciation (depreciation) of investments................ (115,214) (7,814) (28,488) (7,442) (15,805) 1,115 --------- --------- --------- -------- -------- -------- Net decrease in net assets resulting from operations.... (154,666) (42,720) (40,484) (22,802) (18,685) (3,870) --------- --------- --------- -------- -------- -------- From unit transactions: Net proceeds from the issuance of units.......... 282,608 434,904 212,751 241,564 59,511 54,447 Net asset value of units redeemed or used to meet contract obligations....... (145,854) (102,004) (115,312) (65,363) (23,198) (15,463) --------- --------- --------- -------- -------- -------- Net increase from unit transactions................. 136,754 332,900 97,439 176,201 36,313 38,984 --------- --------- --------- -------- -------- -------- Net increase (decrease) in net assets................... (17,912) 290,180 56,955 153,399 17,628 35,114 Net assets beginning of period 423,420 133,240 316,566 163,167 63,364 28,250 --------- --------- --------- -------- -------- -------- Net assets end of period*..... $ 405,508 $ 423,420 $ 373,521 $316,566 $ 80,992 $ 63,364 ========= ========= ========= ======== ======== ======== Unit transactions: Units outstanding beginning of period.................... 57,776 14,902 37,789 17,007 8,012 3,045 Units issued during the period 48,166 56,380 26,645 28,573 8,705 6,917 Units redeemed during the period....................... (26,215) (13,506) (14,932) (7,791) (3,528) (1,950) --------- --------- --------- -------- -------- -------- Units outstanding end of period....................... 79,727 57,776 49,502 37,789 13,189 8,012 ========= ========= ========= ======== ======== ======== ---------- * Includes undistributed net investment income (loss) of: $ 8,408 $ 10,145 $ 5,384 $ 5,073 $ 40 $ (100) ========= ========= ========= ======== ======== ========
See accompanying notes to financial statements. F-68
Mony Custom Equity Master ------------------------------------------------------------------------------------------------------- Janus Aspen Series ------------------------------------------------------------------------------------------------------- Aggressive Capital Worldwide Growth Balanced Appreciation Growth Subaccount Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (2,264) $ (951) $ 6,336 $ 4,996 $ 135 $ 2,383 $ 2,213 $ 838 (53,423) (89,137) (7,684) (5,465) (20,138) (34,995) (31,051) (50,896) (79,345) (23,785) (20,090) (5,338) (36,615) (13,217) (115,176) (28,133) --------- --------- -------- -------- --------- -------- --------- --------- (135,032) (113,873) (21,438) (5,807) (56,618) (45,829) (144,014) (78,191) --------- --------- -------- -------- --------- -------- --------- --------- 335,141 465,872 185,882 228,701 195,615 273,738 314,097 404,800 (152,073) (99,638) (77,079) (54,763) (111,324) (69,512) (135,019) (102,101) --------- --------- -------- -------- --------- -------- --------- --------- 183,068 366,234 108,803 173,938 84,291 204,226 179,078 302,699 --------- --------- -------- -------- --------- -------- --------- --------- 48,036 252,361 87,365 168,131 27,673 158,397 35,064 224,508 401,299 148,938 248,649 80,518 301,122 142,725 454,694 230,186 --------- --------- -------- -------- --------- -------- --------- --------- $ 449,335 $ 401,299 $336,014 $248,649 $ 328,795 $301,122 $ 489,758 $ 454,694 ========= ========= ======== ======== ========= ======== ========= ========= 90,311 20,212 26,527 8,160 46,253 17,106 71,160 27,835 96,423 90,124 25,226 24,202 34,143 39,167 58,155 58,551 (45,616) (20,025) (13,223) (5,835) (20,170) (10,020) (25,843) (15,226) --------- --------- -------- -------- --------- -------- --------- --------- 141,118 90,311 38,530 26,527 60,226 46,253 103,472 71,160 ========= ========= ======== ======== ========= ======== ========= ========= $ (1,007) $ 1,257 $ 12,803 $ 6,467 $ 3,231 $ 3,096 $ 5,248 $ 3,035 ========= ========= ======== ======== ========= ======== ========= =========
F-69 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Custom Equity Master ------------------------------------------- Alger American Lord Abbett Fund Series Funds -------------- ---------------------------- Mid-Cap Growth Mid-Cap Growth and Income Value Subaccount Subaccount Subaccount -------------- -------------- -------------- For the period For the period For the period May 06, 2002** May 31, 2002** May 06, 2002** through through through December 31, December 31, December 31, 2002 2002 2002 -------------- -------------- -------------- From operations: Net investment income (loss). $ (34) $ 32 $ 99 Net realized gain (loss) on investments................ (79) (72) (151) Net change in unrealized appreciation (depreciation) of investments................ (2,027) (363) (1,304) ------- ------ ------- Net increase (decrease) in net assets resulting from operations................... (2,140) (403) (1,356) ------- ------ ------- From unit transactions: Net proceeds from the issuance of units.......... 11,513 9,456 35,121 Net asset value of units redeemed or used to meet contract obligations....... (596) (690) (1,649) ------- ------ ------- Net increase from unit transactions................. 10,917 8,766 33,472 ------- ------ ------- Net increase in net assets.... 8,777 8,363 32,116 Net assets beginning of period 0 0 0 ------- ------ ------- Net assets end of period*..... $ 8,777 $8,363 $32,116 ======= ====== ======= Unit transactions: Units outstanding beginning of period.................... 0 0 0 Units issued during the period 1,468 1,090 4,162 Units redeemed during the period....................... (320) (85) (467) ------- ------ ------- Units outstanding end of period....................... 1,148 1,005 3,695 ======= ====== ======= ---------- * Includes undistributed net investment income (loss) of: $ (34) $ 32 $ 99 ======= ====== =======
** Commencement of operations See notes to financial statements. F-70
MONY Custom Equity Master --------------------------------------------------------------------- The Universal Institutional Funds, Inc. PIMCO Variable Insurance Trust -------------- ---------------------------- U.S. Real Global Real Estate Bond Return Subaccount Subaccount Subaccount Total -------------- -------------- -------------- ------------------------ For the period For the period For the period May 31, 2002** May 31, 2002** May 06, 2002** For the year For the year through through through ended ended December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2001 -------------- -------------- -------------- ------------ ------------ $ 665 $ 278 $ 629 $ 52,785 $ 222,202 (58) 56 111 (402,423) (521,460) (828) 1,666 1,823 (1,424,928) (255,895) ------- ------- ------- ----------- ----------- (221) 2,000 2,563 (1,774,566) (555,153) ------- ------- ------- ----------- ----------- 14,983 20,122 55,591 5,293,268 8,085,547 (816) (973) (2,577) (2,383,418) (1,991,711) ------- ------- ------- ----------- ----------- 14,167 19,149 53,014 2,909,850 6,093,836 ------- ------- ------- ----------- ----------- 13,946 21,149 55,577 1,135,284 5,538,683 0 0 0 7,971,942 2,433,259 ------- ------- ------- ----------- ----------- $13,946 $21,149 $55,577 $ 9,107,226 $ 7,971,942 ======= ======= ======= =========== =========== 0 0 0 1,628 1,958 5,200 (92) (92) (240) ------- ------- ------- 1,536 1,866 4,960 ======= ======= ======= $ 665 $ 278 $ 629 $ 315,478 $ 262,693 ======= ======= ======= =========== ===========
F-71 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS 1. Organization and Business: MONY Variable Account L (the "Variable Account") is a separate investment account established on November 28, 1990 by MONY Life Insurance Company ("MONY"), under the laws of the State of New York. The Variable Account operates as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). The Variable Account holds assets that are segregated from all of MONY's other assets and, at present, is used to support Flexible Premium Variable Life Insurance policies, which include Variable Life (Strategist), Variable Universal Life (MONYEquity Master, MONY Custom Equity Master, MONY Custom Estate Master and MONY Variable Universal Life), and MONY Survivorship Variable Universal Life. These policies are issued by MONY. For presentation purposes, the information related only to the Variable Universal Life Insurance policies (MONY Custom Equity Master) is presented here. There are thirty-five MONY Custom Equity Master Subaccounts within the Variable Account, each of which invests only in a corresponding portfolio of the MONY Series Fund, Inc. (the "Fund"), the Enterprise Accumulation Trust ("Enterprise"), Dreyfus Stock Index Fund, Dreyfus Socially Responsible Growth Fund, Inc., Fidelity Variable Insurance Products Funds, The Universal Institutional Funds, Inc., the Alger American Fund, Lord Abbett Series Fund, PIMCO Variable Insurance Trust, or Janus Aspen Series (collectively, the "Funds"). The subaccounts of MONY Custom Equity Master commenced operations during the years 2000 through 2002. The Funds are registered under the 1940 Act as open-end, diversified, management investment companies. The Fund and Enterprise are affiliated with MONY. These financial statements should be read in conjunction with the financial statements and footnotes of the Funds, which were distributed by MONY to the policyholders. 2. Significant Accounting Policies: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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 each of the respective Funds' portfolios is stated at value which is the net asset value of the respective portfolio as reported by such portfolio. Net asset values are based upon market or fair valuations of the securities held in each of the corresponding portfolios of the Funds. For the Money Market Portfolio, the net asset value is based on amortized cost of the securities held, which approximates market value. Investment Transactions and Investment Income: Investments in the portfolios of the Funds are recorded on the trade date. Realized gains and losses on redemption of investments in the portfolios of the Funds are determined on the identified cost basis. Dividend income and distributions of net realized gains are recorded on the ex-dividend date. Investment income includes dividends from net investment income and distribution of net realized gains received from the respective portfolios of the Funds. Dividends and distributions received are reinvested in additional shares of the respective portfolios of the Funds. Taxes: MONY is currently taxed as a life insurance company and will include the Variable Account's operations in its tax return. MONY does not expect, based on current tax law, to incur any income tax burden upon the earnings or realized gains attributable to the Variable Account. Based on this expectation, no charges are currently being deducted from the Variable Account for Federal income tax purposes. F-72 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 3. Related Party Transactions: MONY is the legal owner of the assets held by the Variable Account. Policy premiums received from MONY by the Variable Account represent gross policy premiums recorded by MONY less deductions retained as compensation for certain sales distribution expenses and premium taxes. The cost of insurance, administration charges, and, if applicable, the cost of any optional benefits added by riders to the insurance policies are deducted monthly from the cash value of the contract to compensate MONY. A surrender charge may be imposed by MONY when a full or partial surrender is requested by the policyholders. These deductions are treated as contractholder redemptions by the Variable Account. The amount deducted for such purposes for all of the MONY Custom Equity Master Subaccounts for the period ended December 31, 2002 aggregated $1,644,980. MONY receives from the Variable Account the amounts deducted for mortality and expense risks at an annual rate of 0.35% of the average daily net assets of each of the MONY Custom Equity Master subaccounts. MONY Life Insurance Company of America (MONY America), a wholly-owned subsidiary of MONY, acts as investment adviser to the Fund and receives amounts paid by the Fund for those services. Enterprise Capital Management, Inc., a wholly-owned subsidiary of MONY, acts as investment adviser to the portfolios of Enterprise, and it receives amounts paid by Enterprise for those services. MONY and MONY America receive fees directly from certain funds for maintaining and servicing policyholders' accounts. During the period ended December 31, 2002, MONY received $4,483 in connection with MONY Custom Equity Master subaccounts. 4. Investment Transactions: Cost of shares acquired and the proceeds from redemption of shares by each subaccount during the year ended December 31, 2002 were as follows:
Cost of Shares Acquired Proceeds from MONY Custom Equity Master Subaccounts (Excludes Reinvestments) Shares Redeemed ------------------------------------- ------------------------ --------------- MONY Series Fund, Inc. Intermediate Term Bond Portfolio... $ 103,239 $ 35,798 Long Term Bond Portfolio........... 120,845 31,133 Government Securities Portfolio.... 173,875 55,800 Money Market Portfolio............. 1,672,022 1,947,822 Enterprise Accumulation Trust Equity Portfolio................... 309,141 90,664 Small Company Value Portfolio...... 247,622 76,120 Managed Portfolio.................. 148,921 38,260 International Growth Portfolio..... 72,144 22,290 High Yield Bond Portfolio.......... 108,761 27,094 Growth Portfolio................... 360,544 99,576 Growth and Income Portfolio........ 312,128 105,077 Small Company Growth Portfolio..... 162,115 51,572
F-73 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 4. Investment Transactions: (continued)
Cost of Shares Acquired Proceeds from MONY Custom Equity Master Subaccounts (Excludes Reinvestments) Shares Redeemed ------------------------------------- ------------------------ --------------- Equity Income Portfolio....................... $ 78,017 $ 24,232 Capital Appreciation Portfolio................ 168,316 58,269 Multi-Cap Growth Portfolio.................... 223,283 101,449 Balanced Portfolio............................ 80,176 34,989 Emerging Countries Portfolio.................. 4,293 1,031 Worldwide Growth Portfolio.................... 8,516 2,285 Mid-Cap Growth Portfolio...................... 34,933 9,049 Total Return Portfolio........................ 241 31 Dreyfus Dreyfus Stock Index Fund...................... 423,812 134,779 Dreyfus Socially Responsible Growth Fund, Inc. 70,241 22,152 Fidelity Variable Insurance Products Funds VIP Growth Portfolio.......................... 239,414 104,766 VIP II Contrafund Portfolio................... 174,504 78,899 VIP III Growth Opportunities Portfolio........ 49,654 13,716 Janus Aspen Series Aggressive Growth Portfolio................... 271,329 90,337 Balanced Portfolio............................ 195,672 88,353 Capital Appreciation Portfolio................ 155,629 72,979 Worldwide Growth Portfolio.................... 258,444 81,777 Alger American Fund Mid-Cap Growth Portfolio...................... 13,375 2,487 Lord Abbett Series Fund Growth and Income Portfolio................... 9,147 395 Mid-Cap Value Portfolio....................... 36,819 3,411 The Universal Institutional Funds, Inc. U.S. Real Estate Portfolio.................... 14,627 487 PIMCO Variable Insurance Trust Global Bond Portfolio......................... 20,034 935 Real Return Portfolio......................... 54,973 2,029
F-74 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 5. Financial Highlights: For a unit outstanding throughout the period ended December 31, 2002:
At December 31, 2002 For the period ended December 31, 2002 ----------------------------- ----------------------------------- Investment Net Assets Income Expense Total MONY Custom Equity Master Subaccounts Units Unit Value (000's) Ratio* Ratio** Return*** ------------------------------------- ------- ---------- ---------- ---------- ------- --------- MONY Series Fund, Inc. Intermediate Term Bond Subaccount............. 11,293 $12.37 $ 140 2.26% 0.35% 8.70% Long Term Bond Subaccount..................... 12,772 13.21 169 2.50 0.35 13.39% Government Securities Subaccount.............. 17,384 12.31 214 1.41 0.35 5.94% Money Market Subaccount....................... 96,370 10.80 1,041 0.97 0.35 0.93% Enterprise Accumulation Trust Equity Subaccount............................. 132,826 4.82 641 0.00 0.35 (29.84)% Small Company Value Subaccount................ 38,844 10.00 389 0.26 0.35 (9.75)% Managed Subaccount............................ 46,292 7.19 333 0.66 0.35 (21.59)% International Growth Subaccount............... 22,624 5.22 118 0.46 0.35 (19.94)% High Yield Bond Subaccount.................... 15,634 10.50 164 5.40 0.35 0.96% Growth Subaccount............................. 105,572 6.46 682 0.27 0.35 (23.74)% Growth and Income Subaccount.................. 81,345 6.51 530 0.81 0.35 (26.36)% Small Company Growth Subaccount............... 42,606 7.36 313 0.00 0.35 (24.36)% Equity Income Subaccount...................... 15,612 7.85 123 0.84 0.35 (15.23)% Capital Appreciation Subaccount............... 48,771 6.36 310 0.00 0.35 (17.30)% Multi-Cap Growth Subaccount................... 83,320 4.16 346 0.00 0.35 (34.90)% Balanced Subaccount........................... 11,429 8.44 96 1.35 0.35 (11.34)% Emerging Countries Subaccount................. 537 7.96 4 0.13 0.35 (17.17)% Worldwide Growth Subaccount................... 1,298 6.59 9 0.00 0.35 (25.11)% Mid-Cap Growth Subaccount..................... 5,215 5.51 29 0.00 0.35 (31.38)% Total Return Subaccount (1)................... 21 10.46 0 1.92(^) 0.35(^) 4.60% Dreyfus Dreyfus Stock Index Subaccount................ 119,048 6.34 755 0.92 0.35 (22.78)% Dreyfus Socially Responsible Growth Subaccount 19,929 4.97 99 0.18 0.35 (29.40)% Fidelity Variable Insurance Products Funds VIP Growth Subaccount......................... 79,727 5.09 406 0.08 0.35 (30.56)% VIP II Contrafund Subaccount.................. 49,502 7.55 374 0.40 0.35 (9.90)% VIP III Growth Opportunities Subaccount....... 13,189 6.14 81 0.47 0.35 (22.38)% Janus Aspen Series Aggressive Growth Subaccount.................. 141,118 3.18 449 0.00 0.35 (28.38)% Balanced Subaccount........................... 38,530 8.72 336 1.71 0.35 (6.94)% Capital Appreciation Subaccount............... 60,226 5.46 329 0.38 0.35 (16.13)% Worldwide Growth Subaccount................... 103,472 4.73 490 0.64 0.35 (25.98)%
F-75 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 5. Financial Highlights: (continued)
At December 31, 2002 For the period ended December 31, 2002 ---------------------------------------- ----------------------------------- Investment Net Assets Income Expense Total MONY Custom Equity Master Subaccounts Units Unit Value (000's) Ratio* Ratio** Return*** ------------------------------------- ------- ---------- ---------- ---------- ------- --------- Alger American Fund Mid Cap Growth Subaccount (2)................ 1,148 $ 7.64 $ 9 0.00% 0.35%(^) (23.60)% Lord Abbett Series Funds Growth and Income Subaccount (3)............. 1,005 8.32 8 0.92(^) 0.35(^) (16.80)% Mid-Cap Value Subaccount (2)................. 3,695 8.69 32 0.77(^) 0.35(^) (13.10)% The Universal Institutional Funds, Inc. U.S. Real Estate Subaccount (3).............. 1,536 9.08 14 4.42(^) 0.35(^) (9.20)% PIMCO Variable Insurance Trust Global Bond Subaccount (3)................... 1,866 11.33 21 1.42(^) 0.35(^) 13.30% Real Return Subaccount (2)................... 4,960 11.20 56 2.16(^) 0.35(^) 12.00% For a unit outstanding throughout the period ended December 31, 2001: At December 31, 2001 For the period ended December 31, 2001 ---------------------------------------- ----------------------------------- Investment Net Assets Income Expense Total MONY Custom Equity Master Subaccounts Units Unit Value (000's) Ratio* Ratio** Return*** ------------------------------------- ------- ---------- ---------- ---------- ------- --------- MONY Series Fund, Inc. Intermediate Term Bond Subaccount............ 5,383 11.38 61 2.71 0.35 8.17 Long Term Bond Subaccount.................... 5,166 11.65 60 3.22 0.35 5.91 Government Securities Subaccount............. 7,316 11.62 85 1.52 0.35 6.22 Money Market Subaccount...................... 121,626 10.70 1,301 3.02 0.35 3.48 Enterprise Accumulation Trust Equity Subaccount............................ 93,665 6.87 643 0.00 0.35 (19.08) Small Company Value Subaccount............... 22,978 11.08 255 0.31 0.35 4.82 Managed Subaccount........................... 31,845 9.17 292 2.72 0.35 (11.49) International Growth Subaccount.............. 14,206 6.52 93 0.82 0.35 (28.04) High Yield Bond Subaccount................... 7,695 10.40 80 8.81 0.35 5.48 Growth Subaccount............................ 70,201 8.47 594 0.56 0.35 (12.86) Growth and Income Subaccount................. 53,806 8.84 476 1.16 0.35 (12.21) Small Company Growth Subaccount.............. 29,439 9.73 287 0.00 0.35 (4.23) Equity Income Subaccount..................... 9,356 9.26 87 1.30 0.35 (11.05) Capital Appreciation Subaccount.............. 33,465 7.69 257 0.74 0.35 (19.39) Multi-Cap Growth Subaccount.................. 60,270 6.39 385 0.00 0.35 (17.34) Balanced Subaccount.......................... 6,380 9.52 61 2.07 0.35 (4.13) Emerging Countries Subaccount (4)............ 169 9.61 2 0.00(^) 0.35(^) (3.90) Worldwide Growth Subaccount (4).............. 463 8.80 4 0.00(^) 0.35(^) (12.00) Mid-Cap Growth Subaccount (4)................ 1,466 8.03 12 0.00(^) 0.35(^) (19.70)
F-76 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 5. Financial Highlights: (continued)
At December 31, 2001 For the period ended December 31, 2001 ---------------------------- ------------------------------------ Investment Net Assets Income Expense Total MONY Custom Equity Master Subaccounts Units Unit Value (000's) Ratio* Ratio** Return*** ------------------------------------- ------ ---------- ---------- ---------- ------- --------- Dreyfus Dreyfus Stock Index Subaccount................ 78,584 $8.21 $645 1.28% 0.35% (12.57)% Dreyfus Socially Responsible Growth Subaccount 11,748 7.04 83 0.09 0.35 (22.89) Fidelity Variable Insurance Products Funds VIP Growth Subaccount......................... 57,776 7.33 423 0.00 0.35 (18.01) VIP II Contrafund Subaccount.................. 37,789 8.38 317 0.51 0.35 (12.62) VIP III Growth Opportunities Subaccount....... 8,012 7.91 63 0.16 0.35 (14.76) Janus Aspen Series Aggressive Growth Subaccount.................. 90,311 4.44 401 0.00 0.35 (39.76) Balanced Subaccount........................... 26,527 9.37 249 3.19 0.35 (5.07) Capital Appreciation Subaccount............... 46,253 6.51 301 1.41 0.35 (21.94) Worldwide Growth Subaccount................... 71,160 6.39 455 0.59 0.35 (22.73)
---------- * This ratio represents the amount of dividend income, excluding distributions from net realized gains, received by the subaccount from the underlying fund, net of investment advisory fees assessed by the underlying fund's investment adviser and other expenses of the underlying fund, divided by the average net assets of the subaccount. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the net asset value per Unit. The recognition of dividend income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. ** This ratio represents the annual contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratio includes only those expenses that result in a direct reduction to net asset value per Unit. Charges made directly to contractholder accounts by redemption of Units and expenses of the respective underlying fund are excluded from this ratio. ***Represents the total return for the period indicated, including changes in the value of the underlying fund, and reflects deductions for all items included in the Expense Ratio. The Total Return does not include any expenses assessed through the redemption of Units; the Total Return would have been lower had such expenses been included in the calculation. Total returns for periods less than one year are not annualized. (^)Annualized (1)For the period June 12, 2002 (commencement of operations) through December 31, 2002 (2)For the period May 6, 2002 (commencement of operations) through December 31, 2002 (3)For the period May 31, 2002 (commencement of operations) through December 31, 2002 (4)For the period June 8, 2001 (commencement of operations) through December 31, 2001. F-77 [THIS PAGE INTENTIONALLY LEFT BLANK] F-78 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of MONY Life Insurance Company and the Contractholders of MONY Variable Account L -- MONY Custom Estate Master In our opinion, the accompanying statements of assets and liabilities 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 each of MONY Custom Estate Master's Subaccounts of MONY Variable Account L at December 31, 2002, and the results of each of their operations, the changes in each of their net assets and the financial highlights for the periods presented, in conformity with accounting principals generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "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 of America, 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 investments at December 31, 2002 by correspondence with the underlying funds' transfer agents, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York April 8, 2003 F-79 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES December 31, 2002
MONY Custom Estate Master --------------------------------------------- MONY Series Fund, Inc. --------------------------------------------- Intermediate Long Term Government Money Term Bond Bond Securities Market Subaccount Subaccount Subaccount Subaccount ------------ ---------- ---------- ---------- ASSETS Shares held in respective Funds....................... 77 1,444 1,008 708,558 ====== ======= ======= ======== Investments at cost........... $ 856 $19,058 $11,512 $708,558 ====== ======= ======= ======== Investments in respective Funds, at net asset value... $ 910 $20,977 $11,913 $708,558 Amount due from respective Funds....................... 0 0 0 145 ------ ------- ------- -------- Total assets........... 910 20,977 11,913 708,703 ------ ------- ------- -------- LIABILITIES Amount due to MONY............ 0 6 3 355 ------ ------- ------- -------- Total liabilities...... 0 6 3 355 ------ ------- ------- -------- Net assets.................... $ 910 $20,971 $11,910 $708,348 ====== ======= ======= ======== Net assets consist of: Contractholders' net payments................... $ 816 $17,717 $11,283 $694,208 Undistributed net investment income.......... 33 1,249 198 14,140 Accumulated net realized gain (loss) on investments. 7 86 28 0 Net unrealized appreciation (depreciation) of investments................ 54 1,919 401 0 ------ ------- ------- -------- Net assets.................... $ 910 $20,971 $11,910 $708,348 ====== ======= ======= ======== Number of units outstanding*.. 79 1,639 1,078 64,399 ------ ------- ------- -------- Net asset value per unit outstanding*................ $11.46 $ 12.79 $ 11.06 $ 11.00 ====== ======= ======= ========
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-80
MONY Custom Estate Master ----------------------------------------------------------------------------------------------------------- Enterprise Accumulation Trust ----------------------------------------------------------------------------------------------------------- Small Company International High Yield Growth and Small Company Equity Equity Value Managed Growth Bond Growth Income Growth Income Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------- ---------- ------------- ---------- ---------- ---------- ------------- ---------- 5,234 3,497 1,250 7,759 4,784 21,742 3,747 4,647 3,536 ======== ======== ======= ======= ======= ======== ======= ======= ======= $ 80,099 $ 72,237 $23,366 $36,586 $21,086 $104,057 $18,450 $33,813 $17,620 ======== ======== ======= ======= ======= ======== ======= ======= ======= $ 64,061 $ 60,016 $19,107 $26,847 $19,329 $ 86,534 $14,800 $27,790 $14,923 0 0 0 0 0 0 0 0 0 -------- -------- ------- ------- ------- -------- ------- ------- ------- 64,061 60,016 19,107 26,847 19,329 86,534 14,800 27,790 14,923 -------- -------- ------- ------- ------- -------- ------- ------- ------- 21 18 6 8 6 26 5 9 5 -------- -------- ------- ------- ------- -------- ------- ------- ------- 21 18 6 8 6 26 5 9 5 -------- -------- ------- ------- ------- -------- ------- ------- ------- $ 64,040 $ 59,998 $19,101 $26,839 $19,323 $ 86,508 $14,795 $27,781 $14,918 ======== ======== ======= ======= ======= ======== ======= ======= ======= $ 95,014 $ 64,204 $23,495 $38,446 $18,912 $116,075 $24,869 $33,905 $17,324 10,644 13,223 1,785 2,927 2,363 334 388 747 196 (25,580) (5,208) (1,920) (4,795) (195) (12,378) (6,812) (848) 95 (16,038) (12,221) (4,259) (9,739) (1,757) (17,523) (3,650) (6,023) (2,697) -------- -------- ------- ------- ------- -------- ------- ------- ------- $ 64,040 $ 59,998 $19,101 $26,839 $19,323 $ 86,508 $14,795 $27,781 $14,918 ======== ======== ======= ======= ======= ======== ======= ======= ======= 11,200 6,299 2,740 5,517 1,888 13,466 2,309 3,764 1,808 -------- -------- ------- ------- ------- -------- ------- ------- ------- $ 5.72 $ 9.53 $ 6.97 $ 4.87 $ 10.23 $ 6.43 $ 6.41 $ 7.38 $ 8.25 ======== ======== ======= ======= ======= ======== ======= ======= =======
F-81 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONY Custom Estate Master -------------------------------------------------------- Enterprise Accumulation Trust -------------------------------------------------------- Capital Multi-Cap Mid-Cap Total Appreciation Growth Balanced Growth Return Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ---------- ---------- ---------- ---------- ASSETS Shares held in respective Funds....................... 3,754 6,880 66 267 14 ======= ======== ===== ====== ====== Investments at cost........... $22,601 $ 56,520 $ 311 $1,904 $ 140 ======= ======== ===== ====== ====== Investments in respective Funds, at net asset value... $17,758 $ 37,909 $ 280 $1,417 $ 142 Amount due from respective Funds....................... 0 0 0 0 0 ------- -------- ----- ------ ------ Total assets........... 17,758 37,909 280 1,417 142 ------- -------- ----- ------ ------ LIABILITIES Amount due to MONY............ 6 12 0 0 0 ------- -------- ----- ------ ------ Total liabilities...... 6 12 0 0 0 ------- -------- ----- ------ ------ Net assets.................... $17,752 $ 37,897 $ 280 $1,417 $ 142 ======= ======== ===== ====== ====== Net assets consist of: Contractholders' net payments................... $26,747 $ 68,366 $ 301 $1,927 $ 136 Undistributed net investment income (loss)... 469 (337) 12 (4) 4 Accumulated net realized gain (loss) on investments. (4,621) (11,521) (2) (19) 0 Net unrealized appreciation (depreciation) of investments................ (4,843) (18,611) (31) (487) 2 ------- -------- ----- ------ ------ Net assets.................... $17,752 $ 37,897 $ 280 $1,417 $ 142 ======= ======== ===== ====== ====== Number of units outstanding*.. 2,933 10,082 30 194 13 ------- -------- ----- ------ ------ Net asset value per unit outstanding*................ $ 6.05 $ 3.76 $9.35 $ 7.28 $10.45 ======= ======== ===== ====== ======
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-82
MONY Custom Estate Master --------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Funds Janus Aspen Series ----------------------------------------- --------------------------------- Dreyfus Dreyfus Socially VIP III Stock Responsible VIP VIP II Growth Aggressive Capital Index Growth Growth Contrafund Opportunities Growth Balanced Appreciation Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ----------- ---------- ---------- ------------- ---------- ---------- ------------ 4,439 981 3,451 3,243 1,573 2,481 2,555 2,606 ======== ======= ======== ======= ======= ======== ======= ======== $120,314 $23,948 $105,642 $64,931 $23,192 $ 41,680 $57,253 $ 52,752 ======== ======= ======== ======= ======= ======== ======= ======== $ 99,753 $18,546 $ 80,540 $58,509 $18,404 $ 39,306 $52,607 $ 45,273 0 0 0 0 0 0 0 0 -------- ------- -------- ------- ------- -------- ------- -------- 99,753 18,546 80,540 58,509 18,404 39,306 52,607 45,273 -------- ------- -------- ------- ------- -------- ------- -------- 30 6 25 17 6 12 16 14 -------- ------- -------- ------- ------- -------- ------- -------- 30 6 25 17 6 12 16 14 -------- ------- -------- ------- ------- -------- ------- -------- $ 99,723 $18,540 $ 80,515 $58,492 $18,398 $ 39,294 $52,591 $ 45,259 ======== ======= ======== ======= ======= ======== ======= ======== $132,988 $27,070 $116,615 $66,490 $24,206 $ 70,727 $57,144 $ 64,702 2,389 14 1,439 824 167 671 2,042 674 (15,093) (3,142) (12,437) (2,400) (1,187) (29,730) (1,949) (12,638) (20,561) (5,402) (25,102) (6,422) (4,788) (2,374) (4,646) (7,479) -------- ------- -------- ------- ------- -------- ------- -------- $ 99,723 $18,540 $ 80,515 $58,492 $18,398 $ 39,294 $52,591 $ 45,259 ======== ======= ======== ======= ======= ======== ======= ======== 15,730 3,895 15,240 7,909 3,204 14,864 5,897 9,317 -------- ------- -------- ------- ------- -------- ------- -------- $ 6.34 $ 4.76 $ 5.28 $ 7.40 $ 5.74 $ 2.64 $ 8.92 $ 4.86 ======== ======= ======== ======= ======= ======== ======= ========
F-83 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONY Custom Estate Master --------------------------------------------------- Janus Aspen Lord Abbett PIMCO Variable Series Series Funds Insurance Trust ----------- ------------ --------------- Worldwide Growth and Real Growth Income Return Subaccount Subaccount Subaccount Total ----------- ------------ --------------- ---------- ASSETS Shares held in respective Funds....................... 3,975 7 8 ======== ===== ====== Investments at cost........... $103,228 $ 134 $ 86 $1,821,934 ======== ===== ====== ========== Investments in respective Funds, at net asset value... $ 83,669 $ 125 $ 91 $1,630,094 Amount due from respective Funds....................... 0 0 0 145 -------- ----- ------ ---------- Total assets........... 83,669 125 91 1,630,239 -------- ----- ------ ---------- LIABILITIES Amount due to MONY............ 26 0 0 638 -------- ----- ------ ---------- Total liabilities...... 26 0 0 638 -------- ----- ------ ---------- Net assets.................... $ 83,643 $ 125 $ 91 $1,629,601 ======== ===== ====== ========== Net assets consist of: Contractholders' net payments................... $120,945 $ 134 $ 85 $1,934,851 Undistributed net investment income.......... 1,498 1 1 58,091 Accumulated net realized gain (loss) on investments. (19,241) (1) 0 (171,501) Net unrealized appreciation (depreciation) of investments................ (19,559) (9) 5 (191,840) -------- ----- ------ ---------- Net assets.................... $ 83,643 $ 125 $ 91 $1,629,601 ======== ===== ====== ========== Number of units outstanding*.. 16,837 15 8 -------- ----- ------ Net asset value per unit outstanding*................ $ 4.97 $8.56 $11.00 ======== ===== ======
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-84 [THIS PAGE INTENTIONALLY LEFT BLANK] F-85 MONY Variable Account L STATEMENT OF OPERATIONS For the year ended December 31, 2002
MONY Custom Estate Master - -------------------------------------------- MONY Series Fund, Inc. -------------------------------------------- Intermediate Long Term Government Money Term Bond Bond Securities Market Subaccount Subaccount Subaccount Subaccount ------------ ---------- ---------- ---------- Dividend income............... $38 $ 824 $222 $ 7,258 Distribution from net realized gains.............. 0 0 0 0 Mortality and expense risk charges..................... (4) (63) (29) (1,719) --- ------ ---- ------- Net investment income (loss).. 34 761 193 5,539 --- ------ ---- ------- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ 4 46 25 0 Net change in unrealized appreciation (depreciation) of investments................ 41 1,594 307 0 --- ------ ---- ------- Net realized and unrealized gain (loss) on investments.. 45 1,640 332 0 --- ------ ---- ------- Net increase (decrease) in net assets resulting from operations.................. $79 $2,401 $525 $ 5,539 === ====== ==== =======
See notes to financial statements. F-86
MONY Custom Estate Master ----------------------------------------------------------------------------------------------------------- Enterprise Accumulation Trust ----------------------------------------------------------------------------------------------------------- Small Company International High Yield Growth and Small Company Equity Equity Value Managed Growth Bond Growth Income Growth Income Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------- ---------- ------------- ---------- ---------- ---------- ------------- ---------- $ 0 $ 218 $ 132 $ 169 $ 1,450 $ 356 $ 297 $ 0 $ 171 0 1,648 0 0 0 0 0 0 0 (221) (193) (54) (97) (59) (284) (79) (95) (52) -------- ------- ------- ------- ------- -------- ------- ------- ------- (221) 1,673 78 72 1,391 72 218 (95) 119 -------- ------- ------- ------- ------- -------- ------- ------- ------- (19,435) (2,139) (1,029) (3,488) (143) (9,532) (6,199) (675) (100) (5,488) (4,962) (2,810) (2,189) (1,149) (14,330) (1,307) (6,193) (2,199) -------- ------- ------- ------- ------- -------- ------- ------- ------- (24,923) (7,101) (3,839) (5,677) (1,292) (23,862) (7,506) (6,868) (2,299) -------- ------- ------- ------- ------- -------- ------- ------- ------- $(25,144) $(5,428) $(3,761) $(5,605) $ 99 $(23,790) $(7,288) $(6,963) $(2,180) ======== ======= ======= ======= ======= ======== ======= ======= =======
F-87 MONY Variable Account L STATEMENT OF OPERATIONS (continued)
MONY Custom Estate Master - ---------------------------------------------------------------------- Enterprise Accumulation Trust ---------------------------------------------------------------------- Capital Multi-Cap Mid-Cap Appreciation Growth Balanced Growth Total Return Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------ ------------ ------------ ------------------ For the year For the year For the year For the year For the period ended ended ended ended June 17, 2002** December 31, December 31, December 31, December 31, through 2002 2002 2002 2002 Deccember 31, 2002 ------------ ------------ ------------ ------------ ------------------ Dividend income...................................... $ 0 $ 0 $ 6 $ 0 $2 Distribution from net realized gains................. 0 0 0 0 2 Mortality and expense risk charges................... (87) (167) 0 (4) 0 ------- -------- ---- ----- -- Net investment income (loss)......................... (87) (167) 6 (4) 4 ------- -------- ---- ----- -- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments............. (3,281) (7,322) (3) (19) 0 Net change in unrealized appreciation (depreciation) of investments.................................... (961) (12,734) (43) (487) 2 ------- -------- ---- ----- -- Net realized and unrealized gain (loss) on investments........................................ (4,242) (20,056) (46) (506) 2 ------- -------- ---- ----- -- Net increase (decrease) in net assets resulting from operations......................................... $(4,329) $(20,223) $(40) $(510) $6 ======= ======== ==== ===== ==
---------- ** Commencement of operations See notes to financial statements. F-88
MONY Custom Estate Master -------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Products Funds Janus Aspen Series --------------------------------------------- ------------------------------------- Dreyfus Dreyfus Socially VIP II VIP III Aggressive Capital Stock Index Responsible Growth VIP Growth Contrafund Growth Opportunities Growth Balanced Appreciation Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------------ ------------ ------------ -------------------- ------------ ------------ ------------ For the year For the year For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 2002 ------------ ------------------ ------------ ------------ -------------------- ------------ ------------ ------------ $ 1,272 $ 49 $ 86 $ 335 $ 148 $ 0 $ 1,273 $ 290 0 0 0 0 0 0 0 0 (308) (56) (253) (168) (61) (142) (159) (173) -------- ------- -------- ------- ------- -------- ------- ------- 964 (7) (167) 167 87 (142) 1,114 117 -------- ------- -------- ------- ------- -------- ------- ------- (12,844) (1,566) (8,926) (1,310) (424) (19,922) (1,470) (9,616) (13,092) (3,944) (18,553) (3,494) (4,095) 6,337 (3,305) 453 -------- ------- -------- ------- ------- -------- ------- ------- (25,936) (5,510) (27,479) (4,804) (4,519) (13,585) (4,775) (9,163) -------- ------- -------- ------- ------- -------- ------- ------- $(24,972) $(5,517) $(27,646) $(4,637) $(4,432) $(13,727) $(3,661) $(9,046) ======== ======= ======== ======= ======= ======== ======= =======
F-89 MONY Variable Account L STATEMENT OF OPERATIONS (continued)
MONY Custom Estate Master - -------------------------------------------- Janus Aspen Lord Abbett PIMCO Variable Series Series Fund Insurance Trust ------------ --------------- --------------- Worldwide Growth and Real Growth Income Return Subaccount Subaccount Subaccount ------------ --------------- --------------- For the period For the period ended ended For the year June 17, 2002** June 17, 2002** ended through through December 31, December 31, December 31, 2002 2002 2002 ------------ --------------- --------------- Dividend income.......................................................... $ 800 $ 1 $1 Distribution from net realized gains..................................... 0 0 0 Mortality and expense risk charges....................................... (270) 0 0 -------- ---- -- Net investment income (loss)............................................. 530 1 1 -------- ---- -- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................................ (12,935) (1) 0 Net change in unrealized appreciation (depreciation) of investments.... (11,190) (9) 5 -------- ---- -- Net realized and unrealized gain (loss) on investments................... (24,125) (10) 5 -------- ---- -- Net increase (decrease) in net assets resulting from operations.......... $(23,595) $ (9) $6 ======== ==== ==
- Total -------------- For the period ended December 31, 2002 -------------- Dividend income.......................................................... $ 15,398 Distribution from net realized gains..................................... 1,650 Mortality and expense risk charges....................................... (4,797) --------- Net investment income (loss)............................................. 12,251 --------- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................................ (122,304) Net change in unrealized appreciation (depreciation) of investments.... (103,795) --------- Net realized and unrealized gain (loss) on investments................... (226,099) --------- Net increase (decrease) in net assets resulting from operations.......... $(213,848) =========
---------- ** Commencement of operations See notes to financial statements. F-90 [THIS PAGE INTENTIONALLY LEFT BLANK] F-91 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS
MONY Custom Estate Master ------------------------------------------------------- MONY Series Fund, Inc. ------------------------------------------------------- Intermediate Long Term Term Bond Bond Subaccount Subaccount ----------------------------- ------------------------ For the year For the period For the year For the year ended April 2, 2001** ended ended December 31, through December 31, December 31, 2002 December 31, 2001 2002 2001 ------------ ----------------- ------------ ------------ From operations: Net investment income (loss). $ 34 $ (1) $ 761 $ 494 Net realized gain (loss) on investments................ 4 3 46 37 Net change in unrealized appreciation (depreciation) of investments................ 41 13 1,594 60 ----- ------ ------- ------- Net increase (decrease) in net assets resulting from operations................... 79 15 2,401 591 ----- ------ ------- ------- From unit transactions: Net proceeds from the issuance of units.......... 0 1,045 8,248 2,505 Net asset value of units redeemed or used to meet contract obligations....... (144) (85) (1,060) (593) ----- ------ ------- ------- Net increase (decrease) from unit transactions............ (144) 960 7,188 1,912 ----- ------ ------- ------- Net increase (decrease) in net assets................... (65) 975 9,589 2,503 Net assets beginning of period 975 0 11,382 8,879 ----- ------ ------- ------- Net assets end of period*..... $ 910 $ 975 $20,971 $11,382 ===== ====== ======= ======= Unit transactions: Units outstanding beginning of period.................... 93 0 1,011 835 Units issued during the period 0 101 718 230 Units redeemed during the period....................... (14) (8) (90) (54) ----- ------ ------- ------- Units outstanding end of period....................... 79 93 1,639 1,011 ===== ====== ======= ======= ---------- * Includes undistributed net investment income (loss) of: $ 33 $ (1) $ 1,249 $ 488 ===== ====== ======= =======
** Commencement of operations See notes to financial statements. F-92
MONY Custom Estate Master ----------------------------------------------------------------------------------------------------------- MONY Series Fund, Inc. Enterprise Accumulation Trust ------------------------------------------------------- -------------------------------------------------- Government Money Small Company Securities Market Equity Value Subaccount Subaccount Subaccount Subaccount ----------------------------- ------------------------ ------------------------ ------------------------ For the year For the period For the year For the year For the year For the year For the year For the year ended March 14, 2001** ended ended ended ended ended ended December 31, through December 31, December 31, December 31, December 31, December 31, December 31, 2002 December 31, 2001 2002 2001 2002 2001 2002 2001 ------------ ----------------- ------------ ------------ ------------ ------------ ------------ ------------ $ 193 $ 5 $ 5,539 $ 5,827 $ (221) $ 8,648 $ 1,673 $ 9,514 25 3 0 0 (19,435) (3,785) (2,139) (804) 307 94 0 0 (5,488) (9,555) (4,962) (7,126) ------- ------ -------- -------- -------- ------- ------- ------- 525 102 5,539 5,827 (25,144) (4,692) (5,428) 1,584 ------- ------ -------- -------- -------- ------- ------- ------- 7,982 5,006 402,375 356,079 43,966 56,343 26,253 31,688 (1,116) (589) (82,635) (67,279) (9,462) (6,293) (5,449) (4,129) ------- ------ -------- -------- -------- ------- ------- ------- 6,866 4,417 319,740 288,800 34,504 50,050 20,804 27,559 ------- ------ -------- -------- -------- ------- ------- ------- 7,391 4,519 325,279 294,627 9,360 45,358 15,376 29,143 4,519 0 383,069 88,442 54,680 9,322 44,622 15,479 ------- ------ -------- -------- -------- ------- ------- ------- $11,910 $4,519 $708,348 $383,069 $ 64,040 $54,680 $59,998 $44,622 ======= ====== ======== ======== ======== ======= ======= ======= 434 0 35,225 8,412 6,726 928 4,236 1,541 748 492 36,717 33,096 6,161 6,560 2,654 3,125 (104) (58) (7,543) (6,283) (1,687) (762) (591) (430) ------- ------ -------- -------- -------- ------- ------- ------- 1,078 434 64,399 35,225 11,200 6,726 6,299 4,236 ======= ====== ======== ======== ======== ======= ======= ======= $ 198 $ 5 $ 14,140 $ 8,601 $ 10,644 $10,865 $13,223 $11,550 ======= ====== ======== ======== ======== ======= ======= =======
F-93 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Custom Estate Master -------------------------------------------------- Enterprise Accumulation Trust -------------------------------------------------- Managed International Growth Subaccount Subaccount ------------------------ ------------------------ For the year For the year For the year For the year ended ended ended ended December 31, December 31, December 31, December 31, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ From operations: Net investment income (loss)............................... $ 78 $ 1,030 $ 72 $ 2,336 Net realized loss on investments........................... (1,029) (835) (3,488) (1,178) Net change in unrealized appreciation (depreciation) of investments.............................................. (2,810) (846) (2,189) (6,782) ------- ------- ------- ------- Net increase (decrease) in net assets resulting from operations................................................. (3,761) (651) (5,605) (5,624) ------- ------- ------- ------- From unit transactions: Net proceeds from the issuance of units.................... 9,711 17,719 10,542 17,902 Net asset value of units redeemed or used to meet contract obligations.............................................. (1,203) (5,076) (2,629) (1,581) ------- ------- ------- ------- Net increase (decrease) from unit transactions.............. 8,508 12,643 7,913 16,321 ------- ------- ------- ------- Net increase (decrease) in net assets....................... 4,747 11,992 2,308 10,697 Net assets beginning of year................................ 14,354 2,362 24,531 13,834 ------- ------- ------- ------- Net assets end of year*..................................... $19,101 $14,354 $26,839 $24,531 ======= ======= ======= ======= Unit transactions: Units outstanding beginning of year......................... 1,617 236 4,047 1,641 Units issued during the year................................ 1,281 1,912 1,928 2,656 Units redeemed during the year.............................. (158) (531) (458) (250) ------- ------- ------- ------- Units outstanding end of year............................... 2,740 1,617 5,517 4,047 ======= ======= ======= ======= ---------- * Includes undistributed net investment income of: $ 1,785 $ 1,707 $ 2,927 $ 2,855 ======= ======= ======= =======
See notes to financial statements. F-94
MONY Custom Estate Master ------------------------------------------------------------------------------------------------------ Enterprise Accumulation Trust ------------------------------------------------------------------------------------------------------ High Yield Growth and Small Company Bond Growth Income Growth Subaccount Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 1,391 $ 820 $ 72 $ 68 $ 218 $ 164 $ (95) $ 808 (143) (47) (9,532) (2,634) (6,199) (617) (675) (201) (1,149) (290) (14,330) (2,248) (1,307) (2,117) (6,193) 299 ------- ------- -------- -------- -------- ------- ------- ------- 99 483 (23,790) (4,814) (7,288) (2,570) (6,963) 906 ------- ------- -------- -------- -------- ------- ------- ------- 10,181 1,541 72,346 45,363 11,659 26,778 9,325 19,290 (1,117) (520) (21,908) (11,723) (20,735) (4,593) (3,317) (2,384) ------- ------- -------- -------- -------- ------- ------- ------- 9,064 1,021 50,438 33,640 (9,076) 22,185 6,008 16,906 ------- ------- -------- -------- -------- ------- ------- ------- 9,163 1,504 26,648 28,826 (16,364) 19,615 (955) 17,812 10,160 8,656 59,860 31,034 31,159 11,544 28,736 10,924 ------- ------- -------- -------- -------- ------- ------- ------- $19,323 $10,160 $ 86,508 $ 59,860 $ 14,795 $31,159 $27,781 $28,736 ======= ======= ======== ======== ======== ======= ======= ======= 1,004 903 7,125 3,218 3,587 1,167 2,949 1,074 996 153 9,496 5,303 1,601 2,935 1,224 2,140 (112) (52) (3,155) (1,396) (2,879) (515) (409) (265) ------- ------- -------- -------- -------- ------- ------- ------- 1,888 1,004 13,466 7,125 2,309 3,587 3,764 2,949 ======= ======= ======== ======== ======== ======= ======= ======= $ 2,363 $ 972 $ 334 $ 262 $ 388 $ 170 $ 747 $ 842 ======= ======= ======== ======== ======== ======= ======= =======
F-95 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Custom Estate Master -------------------------------------------------- Enterprise Accumulation Trust -------------------------------------------------- Equity Capital Income Appreciation Subaccount Subaccount ------------------------ ------------------------ For the year For the year For the year For the year ended ended ended ended December 31, December 31, December 31, December 31, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ From operations: Net investment income (loss).. $ 119 $ 56 $ (87) $ 82 Net realized gain (loss) on investments................ (100) 171 (3,281) (1,204) Net change in unrealized appreciation (depreciation) of investments................ (2,199) (1,073) (961) (2,724) ------- ------- -------- ------- Net increase (decrease) in net assets resulting from operations................. (2,180) (846) (4,329) (3,846) ------- ------- -------- ------- From unit transactions: Net proceeds from the issuance of units.......... 5,369 8,126 6,516 21,985 Net asset value of units redeemed or used to meet contract obligations....... (720) (9,172) (11,624) (3,056) ------- ------- -------- ------- Net increase (decrease) from unit transactions............ 4,649 (1,046) (5,108) 18,929 ------- ------- -------- ------- Net increase (decrease) in net assets................... 2,469 (1,892) (9,437) 15,083 Net assets beginning of period 12,449 14,341 27,189 12,106 ------- ------- -------- ------- Net assets end of period*..... $14,918 $12,449 $ 17,752 $27,189 ======= ======= ======== ======= Unit transactions: Units outstanding beginning of period.................... 1,282 1,313 3,721 1,335 Units issued during the period 606 839 920 2,811 Units redeemed during the period....................... (80) (870) (1,708) (425) ------- ------- -------- ------- Units outstanding end of period....................... 1,808 1,282 2,933 3,721 ======= ======= ======== ======= ---------- * Includes undistributed net investment income (loss) of: $ 196 $ 77 $ 469 $ 556 ======= ======= ======== =======
** Commencement of operations See notes to financial statements. F-96
MONY Custom Estate Master ---------------------------------------------------------------------------------------------------------- Enterprise Accumulation Trust ---------------------------------------------------------------------------------------------------------- Multi-Cap Mid-Cap Growth Balanced Growth Total Return Subaccount Subaccount Subaccount Subaccount ------------------------ ----------------------------- ------------------------------- ----------------- For the year For the year For the year For the period For the year For the period For the period ended ended ended April 2, 2001** ended November 21, 2001** June 17, 2002** December 31, December 31, December 31, through December 31, through through 2002 2001 2002 December 31, 2001 2002 December 31, 2001 December 31, 2002 ------------ ------------ ------------ ----------------- ------------ ------------------- ----------------- $ (167) $ (146) $ 6 $ 6 $ (4) $ 0 $ 4 (7,322) (3,729) (3) 1 (19) 0 0 (12,734) (1,686) (43) 12 (487) 0 2 -------- ------- ----- ---- ------ ---- ---- (20,223) (5,561) (40) 19 (510) 0 6 -------- ------- ----- ---- ------ ---- ---- 15,395 44,917 0 434 2,047 28 173 (10,270) (6,053) (71) (62) (134) (14) (37) -------- ------- ----- ---- ------ ---- ---- 5,125 38,864 (71) 372 1,913 14 136 -------- ------- ----- ---- ------ ---- ---- (15,098) 33,303 (111) 391 1,403 14 142 52,995 19,692 391 0 14 0 0 -------- ------- ----- ---- ------ ---- ---- $ 37,897 $52,995 $ 280 $391 $1,417 $ 14 $142 ======== ======= ===== ==== ====== ==== ==== 9,181 2,823 37 0 1 0 0 3,372 7,402 0 43 209 2 17 (2,471) (1,044) (7) (6) (16) (1) (4) -------- ------- ----- ---- ------ ---- ---- 10,082 9,181 30 37 194 1 13 ======== ======= ===== ==== ====== ==== ==== $ (337) $ (170) $ 12 $ 6 $ (4) $ 0 $ 4 ======== ======= ===== ==== ====== ==== ====
F-97 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Custom Estate Master ---------------------------------------------------- Dreyfus Dreyfus Stock Index Socially Responsible Growth Subaccount Subaccount ------------------------ -------------------------- For the year For the year For the year For the year ended ended ended ended December 31, December 31, December 31, December 31, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ From operations: Net investment income (loss)............................... $ 964 $ 936 $ (7) $ (24) Net realized loss on investments........................... (12,844) (2,187) (1,566) (1,078) Net change in unrealized appreciation (depreciation) of investments.............................................. (13,092) (4,494) (3,944) (998) -------- ------- ------- ------- Net decrease in net assets resulting from operations........ (24,972) (5,745) (5,517) (2,100) -------- ------- ------- ------- From unit transactions: Net proceeds from the issuance of units.................... 63,088 69,752 12,092 12,202 Net asset value of units redeemed or used to meet contract obligations.............................................. (21,894) (7,098) (2,762) (1,622) -------- ------- ------- ------- Net increase (decrease) from unit transactions.............. 41,194 62,654 9,330 10,580 -------- ------- ------- ------- Net increase in net assets.................................. 16,222 56,909 3,813 8,480 Net assets beginning of year................................ 83,501 26,592 14,727 6,247 -------- ------- ------- ------- Net assets end of year*..................................... $ 99,723 $83,501 $18,540 $14,727 ======== ======= ======= ======= Unit transactions: Units outstanding beginning of year......................... 10,189 2,839 2,190 717 Units issued during the year................................ 8,938 8,193 2,341 1,698 Units redeemed during the year.............................. (3,397) (843) (636) (225) -------- ------- ------- ------- Units outstanding end of year............................... 15,730 10,189 3,895 2,190 ======== ======= ======= ======= ---------- * Includes undistributed net investment income of: $ 2,389 $ 1,425 $ 14 $ 21 ======== ======= ======= =======
See notes to financial statements. F-98
MONY Customer Estate Master ------------------------------------------------------------------------------------------------------ Fidelity Variable Insurance Products Funds Janus Aspen Series ---------------------------------------------------------------------------- ------------------------ VIP VIP II VIP III Aggressive Growth Contrafund Growth Opportunities Growth Subaccount Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ (167) $ 1,459 $ 167 $ 672 $ 87 $ (22) $ (142) $ (96) (8,926) (3,339) (1,310) (855) (424) (730) (19,922) (9,172) (18,553) (5,686) (3,494) (2,521) (4,095) (392) 6,337 (3,445) -------- ------- ------- ------- ------- ------- --------- -------- (27,646) (7,566) (4,637) (2,704) (4,432) (1,144) (13,727) (12,713) -------- ------- ------- ------- ------- ------- --------- -------- 49,176 77,497 25,593 34,282 7,376 16,439 176,121 40,375 (10,821) (8,000) (4,516) (3,472) (2,691) (1,440) (157,890) (5,189) -------- ------- ------- ------- ------- ------- --------- -------- 38,355 69,497 21,077 30,810 4,685 14,999 18,231 (35,186) -------- ------- ------- ------- ------- ------- --------- -------- 10,709 61,931 16,440 28,106 253 13,855 4,504 22,473 69,806 7,875 42,052 13,946 18,145 4,290 34,790 12,317 -------- ------- ------- ------- ------- ------- --------- -------- $ 80,515 $69,806 $58,492 $42,052 $18,398 $18,145 $ 39,294 $ 34,790 ======== ======= ======= ======= ======= ======= ========= ======== 9,189 850 5,132 1,486 2,459 496 9,449 2,017 8,031 9,350 3,353 4,057 1,164 2,154 53,687 8,696 (1,980) (1,011) (576) (411) (419) (191) (48,272) (1,264) -------- ------- ------- ------- ------- ------- --------- -------- 15,240 9,189 7,909 5,132 3,204 2,459 14,864 9,449 ======== ======= ======= ======= ======= ======= ========= ======== 1,439 $ 1,606 $ 824 $ 657 $ 167 $ 80 $ 671 $ 813 ======== ======= ======= ======= ======= ======= ========= ========
F-99 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONY Custom Estate Master -------------------------------------------------- Janus Aspen Series -------------------------------------------------- Capital Balanced Appreciation Subaccount Subaccount ------------------------ ------------------------ For the year For the year For the year For the year ended ended ended ended December 31, December 31, December 31, December 31, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ From operations: Net investment income........ $ 1,114 $ 713 $ 117 $ 454 Net realized gain (loss) on investments................ (1,470) (456) (9,616) (2,907) Net change in unrealized appreciation (depreciation) of investments................ (3,305) (1,161) 453 (5,696) ------- ------- -------- ------- Net increase (decrease) in net assets resulting from operations................... (3,661) (904) (9,046) (8,149) ------- ------- -------- ------- From unit transactions: Net proceeds from the issuance of units.......... 27,380 34,764 22,149 45,861 Net asset value of units redeemed or used to meet contract obligations....... (6,241) (4,874) (11,908) (5,894) ------- ------- -------- ------- Net increase from unit transactions................. 21,139 29,890 10,241 39,967 ------- ------- -------- ------- Net increase in net assets.... 17,478 28,986 1,195 31,818 Net assets beginning of period 35,113 6,127 44,064 12,246 ------- ------- -------- ------- Net assets end of period*..... $52,591 $35,113 $ 45,259 $44,064 ======= ======= ======== ======= Unit transactions: Units outstanding beginning of period.................... 3,671 608 7,623 1,653 Units issued during the period 2,913 3,571 4,119 6,927 Units redeemed during the period....................... (687) (508) (2,425) (957) ------- ------- -------- ------- Units outstanding end of period....................... 5,897 3,671 9,317 7,623 ======= ======= ======== ======= ---------- * Includes undistributed net investment income of: $ 2,042 $ 928 $ 674 $ 557 ======= ======= ======== ======= ** Commencement of operations
See notes to financial statements. F-100
MONY Custom Estate Master ---------------------------------------------------------------------------------------------------------------- Janus Aspen Series Lord Abbett Series Fund PIMCO Variable Insurance Products ------------------------ ----------------------- --------------------------------- Worldwide Growth and Real Growth Income Return Subaccount Subaccount Subaccount Total ------------------------ ----------------------- --------------------------------- ---------------------------- For the year For the year For the period For the period For the Period For the Period ended ended June 17, 2002** June 17, 2002** ended ended December 31, December 31, through through December 31, December 31, 2002 2001 December 31, 2002 December 31, 2002 2002 2001 ------------ ------------ ----------------------- --------------------------------- -------------- -------------- $ 530 $ 131 $ 1 $ 1 $ 12,251 $ 33,934 (12,935) (4,931) (1) 0 (122,304) (40,474) (11,190) (5,308) (9) 5 (103,795) (63,670) -------- -------- ---- ---- ---------- ---------- (23,595) (10,108) (9) 6 (213,848) (70,210) -------- -------- ---- ---- ---------- ---------- 55,454 62,365 166 109 1,080,792 1,050,286 (15,582) (7,786) (32) (24) (407,992) (168,577) -------- -------- ---- ---- ---------- ---------- 39,872 54,579 134 85 672,800 881,709 -------- -------- ---- ---- ---------- ---------- 16,277 44,471 125 91 458,952 811,499 67,366 22,895 0 0 1,170,649 359,150 -------- -------- ---- ---- ---------- ---------- $ 83,643 $ 67,366 $125 $ 91 $1,629,601 $1,170,649 ======== ======== ==== ==== ========== ========== 10,066 2,643 0 0 9,837 8,523 27 10 (3,066) (1,100) (12) (2) -------- -------- ---- ---- 16,837 10,066 15 8 ======== ======== ==== ==== $ 1,498 $ 968 $ 1 $ 1 $ 58,091 $ 45,840 ======== ======== ==== ==== ========== ==========
F-101 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS 1. Organization and Business: MONY Variable Account L (the "Variable Account") is a separate investment account established on November 28, 1990 by MONY Life Insurance Company ("MONY"), under the laws of the State of New York. The Variable Account operates as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). The Variable Account holds assets that are segregated from all of MONY's other assets and, at present, is used to support Flexible Premium Variable Life Insurance policies, which include Variable Life (Strategist), Variable Universal Life (MONYEquity Master, MONY Custom Equity Master, MONY Custom Estate Master and MONY Variable Universal Life) and MONY Survivorship Variable Universal Life. These policies are issued by MONY. For presentation purposes, the information related only to the Variable Universal Life Insurance policies (MONY Custom Estate Master) is presented here. There are thirty-five MONY Custom Estate Master Subaccounts available within the Variable Account, each of which invests only in a corresponding portfolio of the MONY Series Fund, Inc. (the "Fund"), the Enterprise Accumulation Trust ("Enterprise"), Dreyfus Stock Index Fund, Dreyfus Socially Responsible Growth Fund, Inc., Fidelity Variable Insurance Products Funds, Janus Aspen Series, Lord Abbett Series Fund, or PIMCO Variable Insurance Trust (collectively, the "Funds"). The subaccounts of MONY Custom Estate Master commenced operations during the years ended December 31, 2000, through 2002. The Funds are registered under the 1940 Act as open end, diversified, management investment companies. The Fund and Enterprise are affiliated with MONY. These financial statements should be read in conjunction with the financial statements and footnotes of the Funds which were distributed by MONY to the policy holders. 2. Significant Accounting Policies: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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 each of the respective Funds' portfolio is stated at value which is the net asset value of the respective portfolio as reported by such portfolio. Net asset values are based upon market or fair valuations of the securities held in each of the corresponding portfolios of the Funds. For the Money Market Portfolio, the net asset value is based on amortized cost of the securities held, which approximates market value. Investment Transactions and Investment Income: Investments in the portfolios of the Funds are recorded on the trade date. Realized gains and losses on redemption of investments in the portfolios of the Funds are determined on the identified cost basis. Dividend income and distributions of net realized gains are recorded on the ex-dividend date. Investment income includes dividends from net investment income and distribution of net realized gains received from the respective portfolios of the Funds. Dividends and distributions received are reinvested in additional shares of the respective portfolios of the Funds. Taxes: MONY is currently taxed as a life insurance company and will include the Variable Account's operations in its tax return. MONY does not expect, based on current tax law, to incur any income tax burden upon the earnings or realized gains attributable to the Variable Account. Based on this expectation, no charges are currently being deducted from the Variable Account for Federal income tax purposes. F-102 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 3. Related Party Transactions: MONY is the legal owner of the assets held by the Variable Account. Policy premiums received from MONY by the Variable Account represent gross policy premiums recorded by MONY less deductions retained as compensation for certain sales distribution expenses and premium taxes. The cost of insurance, administration charges, and, if applicable, the cost of any optional benefits added by riders to the insurance policies are deducted monthly from the cash value of the contract to compensate MONY. A surrender charge may be imposed by MONY when a full or partial surrender is requested by the policyholders. These deductions are treated as contractholder redemptions by the Variable Account. The amount deducted for such purposes for all of the MONY Custom Estate Master Subaccounts for the period ended December 31, 2002 aggregated $263,558. MONY receives from the Variable Account the amounts deducted for mortality and expense risks at an annual rate of 0.35% of the average daily net assets of each of the MONY Custom Estate Master subaccounts. MONY Life Insurance Company of America, (MONY America) a wholly-owned subsidiary of MONY, acts as investment adviser to the Fund and receives amounts paid by the Fund for those services. Enterprise Capital Management, Inc., a wholly-owned subsidiary of MONY, acts as investment adviser to the portfolios of Enterprise, and it receives amounts paid by Enterprise for those services. MONY and MONY America receive fees directly from certain Funds for maintaining and servicing policyholders' accounts. During the period ended December 31, 2002, MONY received $679 in aggregate from certain Funds in connection with MONY Custom Estate Master subaccounts. 4. Investment Transactions: Cost of shares acquired and the proceeds from redemption of shares by each subaccount during the period ended December 31, 2002 were as follows:
Cost of Shares Acquired Proceeds from MONY Custom Estate Master Subaccounts (Excludes Reinvestments) Shares Redeemed ------------------------------------- ------------------------ --------------- MONY Series Fund, Inc. Intermediate Term Bond Portfolio... (0) 148 Long Term Bond Portfolio........... 8,241 1,112 Government Securities Portfolio.... 7,815 976 Money Market Portfolio............. 359,468 41,302 Enterprise Accumulation Trust Equity Portfolio................... 72,745 38,451 Small Company Value Portfolio...... 29,854 9,233 Managed Portfolio.................. 13,165 4,707 International Growth Portfolio..... 13,913 6,093 High Yield Bond Portfolio.......... 10,180 1,171 Growth Portfolio................... 101,816 51,646 Growth and Income Portfolio........ 11,841 20,996 Small Company Growth Portfolio..... 9,429 3,512 Equity Income Portfolio............ 5,360 760 Capital Appreciation Portfolio..... 6,561 11,755
F-103 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 4. Investment Transactions: (continued)
Cost of Shares Acquired Proceeds from MONY Custom Estate Master Subaccounts (Excludes Reinvestments) Shares Redeemed ------------------------------------- ------------------------ --------------- Multi-Cap Growth Portfolio.................... 17,780 12,819 Balanced Portfolio............................ 0 71 Mid-Cap Growth Portfolio...................... 2,024 115 Total Return Portfolio........................ 142 6 Dreyfus Dreyfus Stock Index Fund...................... 76,918 36,016 Dreyfus Socially Responsible Growth Fund, Inc. 13,218 3,940 Fidelity Variable Insurance Products Funds VIP Growth Portfolio.......................... 65,161 27,045 VIP II Contrafund Portfolio................... 28,650 7,731 VIP III Growth Opportunities Portfolio........ 6,758 2,131 Janus Aspen Series Aggressive Growth Portfolio................... 469,573 451,478 Balanced Portfolio............................ 42,701 21,711 Capital Appreciation Portfolio................ 37,454 27,380 Worldwide Growth Portfolio.................... 73,802 34,185 Lord Abbett Series Fund Growth and Income Portfolio................... 218 84 PIMCO Variable Insurance Trust Real Return Portfolio......................... 89 4
5. Financial Highlights: For a unit outstanding throughout the period ended December 31, 2002.
For the period ended At December 31, 2002 December 31, 2002 ----------------------------- --------------------------- Investment Net Assets Income Expense Total MONY Custom Estate Master Subaccounts Units Unit Values (000s) Ratio* Ratio** Return*** ------------------------------------- ------ ----------- ---------- ---------- ------- --------- MONY Series Fund, Inc. Intermediate Term Bond Subaccount.. 79 $11.46 $ 1 3.33% 0.35% 8.94% Long Term Bond Subaccount.......... 1,639 12.79 21 4.58 0.35 13.59 Government Securities Subaccount... 1,078 11.06 12 2.68 0.35 6.24 Money Market Subaccount............ 64,399 11.00 708 1.48 0.35 1.10 Enterprise Accumulation Trust Equity Subaccount.................. 11,200 5.72 64 0.00 0.35 (29.64) Small Company Value Subaccount..... 6,299 9.53 60 0.40 0.35 (9.58) Managed Subaccount................. 2,740 6.97 19 0.86 0.35 (21.50) International Growth Subaccount.... 5,517 4.87 27 0.61 0.35 (19.64) High Yield Bond Subaccount......... 1,888 10.23 19 8.60 0.35 1.09 Growth Subaccount.................. 13,466 6.43 87 0.44 0.35 (23.45) Growth and Income Subaccount....... 2,309 6.41 15 1.32 0.35 (26.24)
F-104 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 5. Financial Highlights: (continued)
For the period ended At December 31, 2002 December 31, 2002 ------------------------- ------------------------------ Investment Net Assets Income Expense Total MONY Custom Estate Master Subaccounts Units Unit Values (000s) Ratio* Ratio** Return*** ------------------------------------- ------ ----------- ---------- ---------- ------- --------- Small Company Growth Subaccount.................... 3,764 7.38 28 0.00 0.35 (24.23) Equity Income Subaccount........................... 1,808 8.25 15 1.15 0.35 (15.04) Capital Appreciation Subaccount.................... 2,933 6.05 18 0.00 0.35 (17.24) Multi-Cap Growth Subaccount........................ 10,082 3.76 38 0.00 0.35 (34.84) Balanced Subaccount................................ 30 9.35 0(/\/\) 1.81 0.35 (11.04) Mid-Cap Growth Subaccount.......................... 194 7.28 1 0.00 0.35 (31.19) Total Return Subaccount(1)......................... 13 10.45 0(/\/\) 3.35(/\) 0.35(/\) 4.50 Dreyfus Dreyfus Stock Index Subaccount..................... 15,730 6.34 100 1.45 0.35 (22.68) Dreyfus Socially Responsible Growth Fund Subaccount 3,895 4.76 19 0.31 0.35 (29.17) Fidelity Variable Insurance Products Funds VIP Growth Subaccount.............................. 15,240 5.28 81 0.12 0.35 (30.53) VIP II Contrafund Subaccount....................... 7,909 7.40 58 0.70 0.35 (9.65) VIP III Growth Opportunities Subaccount............ 3,204 5.74 18 0.85 0.35 (22.22) Janus Aspen Series Aggressive Growth Subaccount....................... 14,864 2.64 39 0.00 0.35 (28.26) Balanced Subaccount................................ 5,897 8.92 53 2.80 0.35 (6.79) Capital Appreciation Subaccount.................... 9,317 4.86 45 0.59 0.35 (15.92) Worldwide Growth Subaccount........................ 16,837 4.97 84 1.04 0.35 (25.71) Lord Abbett Series Funds Growth and Income Subaccount(1).................... 15 8.56 0(/\/\) 1.94(/\) 0.35(/\) (14.40) PIMCO Variable Insurance Trust Real Return Subaccount(1).......................... 8 11.00 0(/\/\) 2.88(/\) 0.35(/\) 10.00
---------- (/\)Annualized (/\/\)Amounts round to less than one thousand (1)For the period June 17, 2002 (commencement of operations) through December 31, 2002. For a unit outstanding throughout the period ended December 31, 2001.
For the period ended At December 31, 2001 December 31, 2001 ----------------------------- -------------------------------- Investment Net Assets Income Expense Total MONY Custom Estate Master Subaccounts Units Unit Values (000s) Ratio* Ratio** Return*** ------------------------------------- ------ ----------- ---------- ---------- ------- --------- MONY Series Fund, Inc. Intermediate Term Bond Subaccount.. 93 $10.52 $ 1 0.00%(/\) 0.35%(/\) 5.20% Long Term Bond Subaccount.......... 1,011 11.26 11 5.15 0.35 5.93 Government Securities Subaccount... 434 10.41 5 0.60(/\) 0.35(/\) 4.10 Money Market Subaccount............ 35,225 10.88 383 3.23 0.35 3.52
F-105 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued)
For the period ended At December 31, 2001 December 31, 2001 ------------------------- ------------------------------ Investment Net Assets Income Expense Total MONY Custom Estate Master Subaccounts Units Unit Values (000s) Ratio* Ratio** Return*** ------------------------------------- ------ ----------- ---------- ---------- ------- --------- Enterprise Accumulation Trust Equity Subaccount............................... 6,726 8.13 55 0.00 0.35 (19.10) Small Company Value Subaccount.................. 4,236 10.54 45 0.30 0.35 4.88 Managed Subaccount.............................. 1,617 8.88 14 2.76 0.35 (11.38) International Growth Subaccount................. 4,047 6.06 25 0.71 0.35 (28.11) High Yield Bond Subaccount...................... 1,004 10.12 10 8.79 0.35 5.53 Growth Subaccount............................... 7,125 8.40 60 0.51 0.35 (12.86) Growth and Income Subaccount.................... 3,587 8.69 31 1.09 0.35 (12.13) Small Company Growth Subaccount................. 2,949 9.74 29 0.00 0.35 (4.23) Equity Income Subaccount........................ 1,282 9.71 12 0.81 0.35 (11.08) Capital Appreciation Subaccount................. 3,721 7.31 27 0.72 0.35 (19.40) Multi-Cap Growth Subaccount..................... 9,181 5.77 53 0.00 0.35 (17.34) Balanced Subaccount............................. 37 10.51 0(/\/\) 2.77(/\) 0.35(/\) 5.10 Mid-Cap Growth Subaccount....................... 1 10.58 0(/\/\) 0.00(/\) 0.35(/\) 5.80 Dreyfus Dreyfus Stock Index Subaccount.................. 10,189 8.20 84 0.49 0.35 (12.49) Dreyfus Socially Responsible Growth Subaccount . 2,190 6.72 15 0.10 0.35 (22.94) Fidelity Variable Insurance Products Funds VIP Growth Subaccount........................... 9,189 7.60 70 0.00 0.35 (18.02) VIP II Contrafund Subaccount.................... 5,132 8.19 42 0.56 0.35 (12.69) VIP III Growth Opportunities Subaccount......... 2,459 7.38 18 0.17 0.35 (14.78) Janus Aspen Series Aggressive Growth Subaccount.................... 9,449 3.68 35 0.00 0.35 (39.67) Balanced Subaccount............................. 3,671 9.57 35 3.12 0.35 (4.97) Capital Appreciation Subaccount................. 7,623 5.78 44 1.57 0.35 (22.00) Worldwide Growth Subaccount..................... 10,066 6.69 67 0.64 0.35 (22.75)
---------- (/\)Annualized (/\/\)Amounts round to less than one thousand * This ratio represents the amount of dividend income, excluding distributions from net realized gains, received by the subaccount from the underlying fund, net of investment advisory fees assessed by the underlying fund's investment adviser and other expenses of the underlying fund, divided by the average net assets of the subaccount. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the net asset value per Unit. The recognition of dividend income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. ** This ratio represents the annual contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratio includes only those expenses that result in a direct reduction to net asset value per Unit. Charges made directly to contractholder accounts by redemption of Units and expenses of the respective underlying fund are excluded from this ratio. ***Represents the total return for the period indicated, including changes in the value of the underlying fund, and reflect deductions for all items included in the Expense Ratio. The Total Return does not include any expenses assessed through the redemption of Units; the Total Return would have been lower had such expenses been included in the calculation. Total returns for periods less than one year are not annualized. F-106 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of MONY Life Insurance Company and the Contractholders of MONY Variable Account L -- Strategist and MONYEquity Master In our opinion, the accompanying statements of assets and liabilities 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 each of the Strategist's and MONYEquity Master's Subaccounts of MONY Variable Account L at December 31, 2002, and the results of each of their operations, the changes in each of their net assets and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "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 of America, 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 investments at December 31, 2002 by correspondence with the underlying funds' transfer agents, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York April 8, 2003 F-107 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES December 31, 2002
Strategist ----------------------------------------------------------------------------- MONY Series Fund, Inc. ------------------------------------------------------------------- Equity Equity Intermediate Long Term Money Growth Income Term Bond Bond Diversified Market Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Total ---------- ---------- ------------ ---------- ----------- ---------- -------- ASSETS Shares held in respective Funds....................... 3,466 3,237 1,315 1,556 8,925 18,146 ======== ======== ======= ======== ======== ======== Investments at cost........... $ 67,554 $ 57,890 $14,520 $ 19,642 $133,348 $ 18,146 $311,100 ======== ======== ======= ======== ======== ======== ======== Investments in respective Funds, at net asset value... $ 42,912 $ 40,239 $15,556 $ 22,613 $ 72,023 $ 18,146 $211,489 Amount due from MONY.......... 0 0 0 0 0 0 0 Amount due from respective Funds....................... 0 0 0 0 0 0 0 -------- -------- ------- -------- -------- -------- -------- Total assets........... 42,912 40,239 15,556 22,613 72,023 18,146 211,489 -------- -------- ------- -------- -------- -------- -------- LIABILITIES Amount due to MONY............ 23 21 8 12 39 10 113 Amount due to respective Funds 0 0 0 0 0 0 0 -------- -------- ------- -------- -------- -------- -------- Total liabilities...... 23 21 8 12 39 10 113 -------- -------- ------- -------- -------- -------- -------- Net assets.................... $ 42,889 $ 40,218 $15,548 $ 22,601 $ 71,984 $ 18,136 $211,376 ======== ======== ======= ======== ======== ======== ======== Net assets consist of: Contractholders' net payments................... $(25,449) $ 12,762 $ 2,469 $(16,789) $ 15,687 $(12,066) $(23,386) Undistributed net investment income.......... 99,661 44,843 10,771 30,430 109,521 30,202 325,428 Accumulated net realized gain (loss) on investments. (6,681) 264 1,272 5,989 8,101 0 8,945 Net unrealized appreciation (depreciation) of investments................ (24,642) (17,651) 1,036 2,971 (61,325) 0 (99,611) -------- -------- ------- -------- -------- -------- -------- Net assets.................... $ 42,889 $ 40,218 $15,548 $ 22,601 $ 71,984 $ 18,136 $211,376 ======== ======== ======= ======== ======== ======== ======== Number of units outstanding*.. 1,027 950 544 626 2,043 877 ======== ======== ======= ======== ======== ======== Net asset value per unit outstanding*................ $ 41.76 $ 42.35 $ 28.59 $ 36.08 $ 35.24 $ 20.69 ======== ======== ======= ======== ======== ========
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-108
MONYEquity Master -------------------------------------------------------------------------------------------------- MONY Series Fund, Inc. Enterprise Accumulation Trust --------------------------------------------- ---------------------------------------------------- Government Intermediate Long Term Money Small Company International Securities Term Bond Bond Market Equity Value Managed Growth Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------ ---------- ---------- ----------- ------------- ----------- ------------- 26,041 16,234 24,056 675,285 401,682 240,654 452,916 306,867 ======== ======== ======== ======== =========== =========== =========== ========== $291,653 $178,663 $306,012 $675,285 $ 9,779,145 $ 5,584,946 $10,951,246 $1,809,622 ======== ======== ======== ======== =========== =========== =========== ========== $307,810 $192,043 $349,530 $675,285 $ 4,916,588 $ 4,129,619 $ 6,920,563 $1,061,761 0 184 0 0 1,246 1,040 1,239 419 0 0 6 268 1,103 685 1,406 303 -------- -------- -------- -------- ----------- ----------- ----------- ---------- 307,810 192,227 349,536 675,553 4,918,937 4,131,344 6,923,208 1,062,483 -------- -------- -------- -------- ----------- ----------- ----------- ---------- 201 125 235 712 4,532 3,428 6,013 1,017 0 184 0 0 1,246 1,040 1,239 419 -------- -------- -------- -------- ----------- ----------- ----------- ---------- 201 309 235 712 5,778 4,468 7,252 1,436 -------- -------- -------- -------- ----------- ----------- ----------- ---------- $307,609 $191,918 $349,301 $674,841 $ 4,913,159 $ 4,126,876 $ 6,915,956 $1,061,047 ======== ======== ======== ======== =========== =========== =========== ========== $267,881 $165,266 $268,980 $607,883 $ 7,886,268 $ 3,878,265 $ 8,914,424 $1,635,345 21,300 12,831 44,166 66,958 3,534,535 2,024,352 5,110,510 297,310 2,271 441 (7,363) 0 (1,645,087) (320,414) (3,078,295) (123,747) 16,157 13,380 43,518 0 (4,862,557) (1,455,327) (4,030,683) (747,861) -------- -------- -------- -------- ----------- ----------- ----------- ---------- $307,609 $191,918 $349,301 $674,841 $ 4,913,159 $ 4,126,876 $ 6,915,956 $1,061,047 ======== ======== ======== ======== =========== =========== =========== ========== 22,488 13,508 22,745 53,939 585,851 216,070 652,248 133,659 ======== ======== ======== ======== =========== =========== =========== ========== $ 13.68 $ 14.21 $ 15.36 $ 12.51 $ 8.39 $ 19.10 $ 10.60 $ 7.94 ======== ======== ======== ======== =========== =========== =========== ==========
F-109 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONYEquity Master ------------------------------------------------------------------ Enterprise Accumulation Trust ------------------------------------------------------------------ High Yield Growth and Capital Equity Bond Growth Income Appreciation Balanced Income Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------- ---------- ------------ ---------- ---------- ASSETS Shares held in respective Funds.... 156,540 53,717 110,119 20,054 297 1,198 ======== ======== ========= ======== ====== ====== Investments at cost................ $717,927 $287,741 $ 636,894 $125,061 $1,221 $5,593 ======== ======== ========= ======== ====== ====== Investments in respective Funds, at net asset value............... $632,422 $213,793 $ 434,968 $ 94,856 $1,260 $5,054 Amount due from MONY............... 8 102 0 10 0 0 Amount due from respective Funds... 145 16 5 9 0 0 -------- -------- --------- -------- ------ ------ Total assets................ 632,575 213,911 434,973 94,875 1,260 5,054 -------- -------- --------- -------- ------ ------ LIABILITIES Amount due to MONY................. 564 160 294 73 1 3 Amount due to respective Funds..... 8 102 0 10 0 0 -------- -------- --------- -------- ------ ------ Total liabilities........... 572 262 294 83 1 3 -------- -------- --------- -------- ------ ------ Net assets......................... $632,003 $213,649 $ 434,679 $ 94,792 $1,259 $5,051 ======== ======== ========= ======== ====== ====== Net assets consist of: Contractholders' net payments.... $595,403 $346,126 $ 675,825 $136,704 $1,479 $5,816 Undistributed net investment income (loss)................... 188,619 3,220 1,914 2,526 41 51 Accumulated net realized gain (loss) on investments........... (66,514) (61,749) (41,134) (14,233) (300) (277) Net unrealized appreciation (depreciation) of investments... (85,505) (73,948) (201,926) (30,205) 39 (539) -------- -------- --------- -------- ------ ------ Net assets......................... $632,003 $213,649 $ 434,679 $ 94,792 $1,259 $5,051 ======== ======== ========= ======== ====== ====== Number of units outstanding*....... 51,078 33,150 68,556 15,482 149 638 ======== ======== ========= ======== ====== ====== Net asset value per unit outstanding*..................... $ 12.37 $ 6.45 $ 6.34 $ 6.12 $ 8.47 $ 7.91 ======== ======== ========= ======== ====== ======
---------- *Units outstanding have been rounded for presentation purposes. **Rounds to less than one. See notes to financial statements. F-110
MONYEquity Master ----------------------------------------------------------------------------------- Enterprise Accumulation Trust ---------------------------------------------------- Small Dreyfus Multi-Cap Company Mid-Cap Worldwide Emerging Stock Dreyfus Socially Growth Growth Growth Growth Countries Index Responsible Growth Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ---------- ---------- ---------- ---------- ---------- ------------------ 1,379 4,791 2,299 63 0** 7,223 49 ======= ======= ======= ===== ===== ======== ====== $ 9,600 $29,924 $16,860 $ 539 $ 0 $214,231 $1,152 ======= ======= ======= ===== ===== ======== ====== $ 7,597 $28,649 $12,183 $ 427 $ 0 $162,310 $ 930 0 0 0 0 0 17 0 0 0 0 0 0 5 0 ------- ------- ------- ----- ----- -------- ------ 7,597 28,649 12,183 427 0 162,332 930 ------- ------- ------- ----- ----- -------- ------ 4 10 7 1 0 112 1 0 0 0 0 0 17 0 ------- ------- ------- ----- ----- -------- ------ 4 10 7 1 0 129 1 ------- ------- ------- ----- ----- -------- ------ $ 7,593 $28,639 $12,176 $ 426 $ 0 $162,203 $ 929 ======= ======= ======= ===== ===== ======== ====== $10,286 $30,036 $17,324 $ 549 $(850) $229,000 $1,364 (55) 40 (103) (4) (4) 4,134 (6) (635) (162) (368) (7) 854 (19,010) (207) (2,003) (1,275) (4,677) (112) 0 (51,921) (222) ------- ------- ------- ----- ----- -------- ------ $ 7,593 $28,639 $12,176 $ 426 $ 0 $162,203 $ 929 ======= ======= ======= ===== ===== ======== ====== 1,337 3,613 1,874 57 0** 26,426 154 ======= ======= ======= ===== ===== ======== ====== $ 5.68 $ 7.93 $ 6.50 $7.42 $0.00 $ 6.14 $ 6.04 ======= ======= ======= ===== ===== ======== ======
F-111 MONY Variable Account L STATEMENT OF ASSETS AND LIABILITIES (continued) December 31, 2002
MONYEquity Master ----------------------------------------- Fidelity Variable Insurance Products Funds ----------------------------------------- VIP III VIP VIP II Growth Growth Contrafund Opportunities Subaccount Subaccount Subaccount ---------- ---------- ------------- ASSETS Shares held in respective Funds....................... 7,896 7,525 154 ======== ======== ====== Investments at cost........... $272,749 $156,380 $2,373 ======== ======== ====== Investments in respective Funds, at net asset value... $184,288 $135,751 $1,807 Amount due from MONY.......... 9 7 0 Amount due from respective Funds....................... 10 13 0 -------- -------- ------ Total assets........... 184,307 135,771 1,807 -------- -------- ------ LIABILITIES Amount due to MONY............ 133 101 1 Amount due to respective Funds 9 7 0 -------- -------- ------ Total liabilities...... 142 108 1 -------- -------- ------ Net assets.................... $184,165 $135,663 $1,806 ======== ======== ====== Net assets consist of: Contractholders' net payments................... $315,759 $164,598 $2,429 Undistributed net investment income (loss)... 9,159 1,628 (6) Accumulated net realized loss on investments........ (52,292) (9,934) (51) Net unrealized depreciation of investments............. (88,461) (20,629) (566) -------- -------- ------ Net assets.................... $184,165 $135,663 $1,806 ======== ======== ====== Number of units outstanding*.. 35,429 18,390 251 ======== ======== ====== Net asset value per unit outstanding*................ $ 5.20 $ 7.38 $ 7.19 ======== ======== ======
---------- * Units outstanding have been rounded for presentation purposes. See notes to financial statements. F-112
MONYEquity Master ---------------------------------------------------------- Janus Aspen Series -------------------------------------------- Aggressive Capital Worldwide Growth Balanced Appreciation Growth Subaccount Subaccount Subaccount Subaccount Total ---------- ---------- ------------ ---------- ------------ 265 1,986 14,566 11,115 ====== ======= ======== ======== $5,191 $43,061 $344,108 $330,559 $ 32,777,736 ====== ======= ======== ======== ============ $4,194 $40,886 $253,016 $233,967 $ 21,001,557 0 0 52 42 4,375 0 0 8 10 3,992 ------ ------- -------- -------- ------------ 4,194 40,886 253,076 234,019 21,009,924 ------ ------- -------- -------- ------------ 2 16 176 163 18,085 0 0 52 42 4,375 ------ ------- -------- -------- ------------ 2 16 228 205 22,460 ------ ------- -------- -------- ------------ $4,192 $40,870 $252,848 $233,814 $ 20,987,464 ====== ======= ======== ======== ============ $5,489 $42,247 $395,337 $396,007 $ 26,995,240 (29) 901 2,570 8,294 11,334,852 (271) (103) (53,967) (73,895) (5,566,449) (997) (2,175) (91,092) (96,592) (11,776,179) ------ ------- -------- -------- ------------ $4,192 $40,870 $252,848 $233,814 $ 20,987,464 ====== ======= ======== ======== ============ 729 4,496 46,743 51,123 ====== ======= ======== ======== $ 5.75 $ 9.09 $ 5.41 $ 4.57 ====== ======= ======== ========
F-113 MONY Variable Account L STATEMENT OF OPERATIONS For the year ended December 31, 2002
Strategist ----------------------------------------------------------------------------- MONY Series Fund, Inc. ------------------------------------------------------------------- Equity Equity Intermediate Long Term Money Growth Income Term Bond Bond Diversified Market Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Total ---------- ---------- ------------ ---------- ----------- ---------- -------- Dividend income............... $ 328 $ 734 $306 $ 714 $ 1,642 $ 441 $ 4,165 Distribution from net realized gains.............. 0 3,871 0 0 9,810 0 13,681 Mortality and expense risk charges..................... (333) (259) (63) (108) (475) (177) (1,415) -------- -------- ---- ------ -------- ----- -------- Net investment income (loss).. (5) 4,346 243 606 10,977 264 16,431 -------- -------- ---- ------ -------- ----- -------- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ (13,729) (3,537) 50 349 (1,998) 0 (18,865) Net change in unrealized appreciation (depreciation) of investments................ (2,496) (9,074) 585 1,344 (23,719) 0 (33,360) -------- -------- ---- ------ -------- ----- -------- Net realized and unrealized gain (loss) on investments.. (16,225) (12,611) 635 1,693 (25,717) 0 (52,225) -------- -------- ---- ------ -------- ----- -------- Net increase (decrease) in net assets resulting from operations.................. $(16,230) $ (8,265) $878 $2,299 $(14,740) $ 264 $(35,794) ======== ======== ==== ====== ======== ===== ========
See notes to financial statements. F-114
MONYEquity Master --------------------------------------------------------------------------------------------------- MONY Series Fund, Inc. Enterprise Accumulation Trust --------------------------------------------- ---------------------------------------------------- Government Intermediate Long Term Money Small Company International Securities Term Bond Bond Market Equity Value Managed Growth Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------ ---------- ---------- ----------- ------------- ----------- ------------- $ 7,121 $ 5,172 $13,869 $ 8,657 $ 0 $ 16,024 $ 72,064 $ 7,740 0 0 0 0 0 121,076 0 0 (1,897) (1,169) (2,407) (4,385) (40,974) (32,520) (56,691) (8,582) ------- ------- ------- ------- ----------- --------- ----------- --------- 5,224 4,003 11,462 4,272 (40,974) 104,580 15,373 (842) ------- ------- ------- ------- ----------- --------- ----------- --------- 2,454 1,031 3,739 0 (857,964) (226,536) (863,263) (132,682) 6,736 8,073 25,745 0 (1,087,161) (324,615) (1,066,672) (120,722) ------- ------- ------- ------- ----------- --------- ----------- --------- 9,190 9,104 29,484 0 (1,945,125) (551,151) (1,929,935) (253,404) ------- ------- ------- ------- ----------- --------- ----------- --------- $14,414 $13,107 $40,946 $ 4,272 $(1,986,099) $(446,571) $(1,914,562) $(254,246) ======= ======= ======= ======= =========== ========= =========== =========
F-115 MONY Variable Account L STATEMENT OF OPERATIONS (continued)
MONYEquity Master ---------------------------------------------------------------------------- Enterprise Accumulation Trust ---------------------------------------------------------------------------- High Yield Growth and Capital Equity Bond Growth Income Appreciation Balanced Income Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ------------ ------------ ------------ ------------ ------------ ------------ For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 ------------ ------------ ------------ ------------ ------------ ------------ Dividend income............... $ 52,769 $ 909 $ 5,857 $ 0 $ 14 $ 62 Distribution from net realized gains.............. 0 0 0 0 0 0 Mortality and expense risk charges..................... (4,568) (1,682) (3,615) (709) (5) (28) -------- -------- --------- -------- ---- ----- Net investment income (loss).. 48,201 (773) 2,242 (709) 9 34 -------- -------- --------- -------- ---- ----- Realized and unrealized gain (loss) on investments: Net realized gain (loss) on investments................ (14,373) (13,190) (30,279) (4,626) (61) (16) Net change in unrealized appreciation (depreciation) of investments................ (28,095) (47,239) (121,571) (13,383) 39 (639) -------- -------- --------- -------- ---- ----- Net realized and unrealized gain (loss) on investments.. (42,468) (60,429) (151,850) (18,009) (22) (655) -------- -------- --------- -------- ---- ----- Net increase (decrease) in net assets resulting from operations.................. $ 5,733 $(61,202) $(149,608) $(18,718) $(13) $(621) ======== ======== ========= ======== ==== =====
---------- ** Commencement of operations See notes to financial statements. F-116
MONYEquity Master --------------------------------------------------------------------------------------------------- Enterprise Accumulation Trust ------------------------------------------------------------------- Multi-Cap Small Company Mid-Cap Worldwide Emerging Dreyfus Dreyfus Socially Growth Growth Growth Growth Countries Stock Index Responsible Growth Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount ---------- ------------- ------------ ------------ --------------- ------------ ------------------ For the period For the year For the year For the year For the year July 24, 2002** For the year For the year ended ended ended ended through ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2002 2002 2002 2002 2002 2002 ------------ ------------- ------------ ------------ --------------- ------------ ------------------ $ 0 $ 0 $ 0 $ 0 $ 0 $ 2,229 $ 2 0 0 0 0 0 0 0 (42) (60) (96) (3) (4) (1,178) (7) ------- ------- ------- ----- ---- -------- ----- (42) (60) (96) (3) (4) 1,051 (5) ------- ------- ------- ----- ---- -------- ----- (594) (144) (350) (7) 854 (8,761) (198) (1,869) (1,383) (4,547) (112) 0 (34,207) (214) ------- ------- ------- ----- ---- -------- ----- (2,463) (1,527) (4,897) (119) 854 (42,968) (412) ------- ------- ------- ----- ---- -------- ----- $(2,505) $(1,587) $(4,993) $(122) $850 $(41,917) $(417) ======= ======= ======= ===== ==== ======== =====
F-117 MONY Variable Account L STATEMENT OF OPERATIONS (continued) For the year ended December 31, 2002
MONYEquity Master ----------------------------------------- Fidelity Variable Insurance Products Funds ----------------------------------------- VIP III VIP VIP II Growth Growth Contrafund Opportunities Subaccount Subaccount Subaccount ---------- ---------- ------------- Dividend income......................... $ 246 $ 804 $ 15 Distribution from net realized gains.... 0 0 0 Mortality and expense risk charges...... (1,412) (944) (14) -------- -------- ----- Net investment income (loss)............ (1,166) (140) 1 -------- -------- ----- Realized and unrealized gain (loss) on investments: Net realized loss on investments...... (23,790) (3,569) (41) Net change in unrealized depreciation of investments....................... (44,839) (9,772) (426) -------- -------- ----- Net realized and unrealized loss on investments........................... (68,629) (13,341) (467) -------- -------- ----- Net decrease in net assets resulting from operations....................... $(69,795) $(13,481) $(466) ======== ======== =====
See notes to financial statements. F-118
MONYEquity Master --------------------------------------------------------- Janus Aspen Series -------------------------------------------- Aggressive Capital Worldwide Growth Balanced Appreciation Growth Subaccount Subaccount Subaccount Subaccount Total ---------- ---------- ------------ ---------- ----------- $ 0 $ 719 $ 1,507 $ 2,306 $ 198,086 0 0 0 0 121,076 (20) (130) (1,875) (1,730) (166,747) ----- ------- -------- -------- ----------- (20) 589 (368) 576 152,415 ----- ------- -------- -------- ----------- (228) (44) (29,905) (25,537) (2,228,080) (680) (1,614) (14,198) (45,044) (2,928,409) ----- ------- -------- -------- ----------- (908) (1,658) (44,103) (70,581) (5,156,489) ----- ------- -------- -------- ----------- $(928) $(1,069) $(44,471) $(70,005) $(5,004,074) ===== ======= ======== ======== ===========
F-119 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS
Strategist ---------------------------------------------------------------------------- MONY Series Fund, Inc. ---------------------------------------------------------------------------- Equity Growth Equity Income Intermediate Term Bond Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ From operations: Net Investment income (loss). $ (5) $ 39,337 $ 4,346 $ 4,823 $ 243 $ 358 Net realized gain (loss) on investments................ (13,729) (42,503) (3,537) (5,128) 50 27 Net change in unrealized appreciation (depreciation) of investments................ (2,496) (14,629) (9,074) (5,340) 585 194 -------- -------- ------- ------- ------- ------- Net increase (decrease) in net assets resulting from operations................... (16,230) (17,795) (8,265) (5,645) 878 579 -------- -------- ------- ------- ------- ------- From unit transactions: Net proceeds from the issuance of units.......... 24,753 10,837 15,496 9,400 7,558 407 Net asset value of units redeemed or used to meet contract obligations....... (22,895) (37,289) (7,955) (9,050) (644) (684) -------- -------- ------- ------- ------- ------- Net increase (decrease) from unit transactions............ 1,858 (26,452) 7,541 350 6,914 (277) -------- -------- ------- ------- ------- ------- Net increase (decrease) in net assets................... (14,372) (44,247) (724) (5,295) 7,792 302 Net assets beginning of year.. 57,261 101,508 40,942 46,237 7,756 7,454 -------- -------- ------- ------- ------- ------- Net assets end of year*....... $ 42,889 $ 57,261 $40,218 $40,942 $15,548 $ 7,756 ======== ======== ======= ======= ======= ======= Unit transactions: Units outstanding beginning of year...................... 1,054 1,498 815 815 295 306 Units issued during the year.. 501 189 328 185 273 16 Units redeemed during the year (528) (633) (193) (185) (24) (27) -------- -------- ------- ------- ------- ------- Units outstanding end of year. 1,027 1,054 950 815 544 295 ======== ======== ======= ======= ======= ======= ---------- * Includes undistributed net investment income of: $ 99,661 $ 99,666 $44,843 $40,497 $10,771 $10,528 ======== ======== ======= ======= ======= =======
See notes to financial statements. F-120
Strategist ------------------------------------------------------------------------------------------------------ MONY Series Fund, Inc. ---------------------------------------------------------------------------- Long Term Bond Diversified Money Market Subaccount Subaccount Subaccount Total ------------------------ ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 606 $ 707 $ 10,977 $ 25,714 $ 264 $ 1,132 $ 16,431 $ 72,071 349 140 (1,998) (771) 0 0 (18,865) (48,235) 1,344 0 (23,719) (42,095) 0 0 (33,360) (61,870) ------- ------- -------- -------- -------- ------- -------- -------- 2,299 847 (14,740) (17,152) 264 1,132 (35,794) (38,034) ------- ------- -------- -------- -------- ------- -------- -------- 7,861 695 1,684 1,816 273 26,387 57,625 49,542 (2,785) (1,469) (2,739) (4,976) (28,450) (3,158) (65,468) (56,626) ------- ------- -------- -------- -------- ------- -------- -------- 5,076 (774) (1,055) (3,160) (28,177) 23,229 (7,843) (7,084) ------- ------- -------- -------- -------- ------- -------- -------- 7,375 73 (15,795) (20,312) (27,913) 24,361 (43,637) (45,118) 15,226 15,153 87,779 108,091 46,049 21,688 255,013 300,131 ------- ------- -------- -------- -------- ------- -------- -------- $22,601 $15,226 $ 71,984 $ 87,779 $ 18,136 $46,049 $211,376 $255,013 ======= ======= ======== ======== ======== ======= ======== ======== 478 503 2,071 2,144 2,246 1,091 230 22 44 41 13 1,312 (82) (47) (72) (114) (1,382) (157) ------- ------- -------- -------- -------- ------- 626 478 2,043 2,071 877 2,246 ======= ======= ======== ======== ======== ======= $30,430 $29,824 $109,521 $ 98,544 $ 30,202 $29,938 $325,428 $308,997 ======= ======= ======== ======== ======== ======= ======== ========
F-121 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONYEquity Master ---------------------------------------------------------------------------- MONY Series Fund, Inc. ---------------------------------------------------------------------------- Government Intermediate Term Long Term Securities Bond Bond Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ From operations: Net Investment income (loss). $ 5,224 $ 7,101 $ 4,003 $ 4,146 $ 11,462 $ 11,265 Net realized gain (loss) on investments................ 2,454 1,848 1,031 373 3,739 3,331 Net change in unrealized appreciation (depreciation) of investments................ 6,736 1,700 8,073 2,572 25,745 (686) -------- -------- -------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations................... 14,414 10,649 13,107 7,091 40,946 13,910 -------- -------- -------- -------- -------- -------- From unit transactions: Net proceeds from the issuance of units.......... 128,886 80,538 79,225 41,738 70,999 86,596 Net asset value of units redeemed or used to meet contract obligations....... (53,760) (43,706) (19,896) (15,441) (54,629) (52,289) -------- -------- -------- -------- -------- -------- Net increase from unit transactions................. 75,126 36,832 59,329 26,297 16,370 34,307 -------- -------- -------- -------- -------- -------- Net increase (decrease) in net assets................... 89,540 47,481 72,436 33,388 57,316 48,217 Net assets beginning of year.. 218,069 170,588 119,482 86,094 291,985 243,768 -------- -------- -------- -------- -------- -------- Net assets end of year*....... $307,609 $218,069 $191,918 $119,482 $349,301 $291,985 ======== ======== ======== ======== ======== ======== Unit transactions: Units outstanding beginning of year...................... 16,863 13,956 9,128 7,085 21,528 18,963 Units issued during the year.. 9,797 6,354 6,136 3,258 5,085 6,605 Units redeemed during the year (4,172) (3,447) (1,756) (1,215) (3,868) (4,040) -------- -------- -------- -------- -------- -------- Units outstanding end of year. 22,488 16,863 13,508 9,128 22,745 21,528 ======== ======== ======== ======== ======== ======== ---------- * Includes undistributed net investment income of: $ 21,300 $ 16,076 $ 12,831 $ 8,828 $ 44,166 $ 32,704 ======== ======== ======== ======== ======== ========
See notes to financial statements. F-122
MONYEquity Master ------------------------------------------------------------------------------------------------------ MONY Series Fund, Inc. Enterprise Accumulation Trust ------------------------ ---------------------------------------------------------------------------- Money Small Company Market Equity Value Managed Subaccount Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 4,272 $ 12,101 $ (40,974) $ 1,065,812 $ 104,580 $1,043,032 $ 15,373 $ 570,036 0 0 (857,964) (863,163) (226,536) (200,237) (863,263) (1,347,132) 0 0 (1,087,161) (1,586,564) (324,615) (673,717) (1,066,672) (296,366) --------- --------- ----------- ----------- ---------- ---------- ----------- ----------- 4,272 12,101 (1,986,099) (1,383,915) (446,571) 169,078 (1,914,562) (1,073,462) --------- --------- ----------- ----------- ---------- ---------- ----------- ----------- 396,455 227,921 1,539,453 1,703,994 934,482 1,037,221 1,823,189 2,046,956 (229,116) (110,374) (1,010,245) (969,103) (699,833) (572,189) (1,554,685) (1,270,158) --------- --------- ----------- ----------- ---------- ---------- ----------- ----------- 167,339 117,547 529,208 734,891 234,649 465,032 268,504 776,798 --------- --------- ----------- ----------- ---------- ---------- ----------- ----------- 171,611 129,648 (1,456,891) (649,024) (211,922) 634,110 (1,646,058) (296,664) 503,230 373,582 6,370,050 7,019,074 4,338,798 3,704,688 8,562,014 8,858,678 --------- --------- ----------- ----------- ---------- ---------- ----------- ----------- $ 674,841 $ 503,230 $ 4,913,159 $ 6,370,050 $4,126,876 $4,338,798 $ 6,915,956 $ 8,562,014 ========= ========= =========== =========== ========== ========== =========== =========== 40,522 30,993 532,023 472,274 204,616 182,442 631,443 575,976 31,788 18,556 161,310 139,694 45,946 50,013 157,345 146,154 (18,371) (9,027) (107,482) (79,945) (34,492) (27,839) (136,540) (90,687) --------- --------- ----------- ----------- ---------- ---------- ----------- ----------- 53,939 40,522 585,851 532,023 216,070 204,616 652,248 631,443 ========= ========= =========== =========== ========== ========== =========== =========== $ 66,958 $ 62,686 $ 3,534,535 $ 3,575,509 $2,024,352 $1,919,772 $ 5,110,510 $ 5,095,137 ========= ========= =========== =========== ========== ========== =========== ===========
F-123 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONYEquity Master ---------------------------------------------------------------------------- Enterprise Accumulation Trust ---------------------------------------------------------------------------- High Yield International Bond Growth Growth Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ For the year For the year For the year For the year For the year For the year ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ ------------ From operations: Net Investment income (loss)...... $ (842) $ 128,013 $ 48,201 $ 46,007 $ (773) $ (575) Net realized loss on investments.. (132,682) (98,675) (14,373) (18,199) (13,190) (4,515) Net change in unrealized appreciation (depreciation) of investments..................... (120,722) (445,255) (28,095) (1,547) (47,239) (22,821) ---------- ---------- --------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations.. (254,246) (415,917) 5,733 26,261 (61,202) (27,911) ---------- ---------- --------- -------- -------- -------- From unit transactions: Net proceeds from the issuance of units........................... 367,258 432,230 130,510 145,404 73,555 81,619 Net asset value of units redeemed or used to meet contract obligations..................... (222,189) (234,412) (101,903) (82,820) (41,210) (19,913) ---------- ---------- --------- -------- -------- -------- Net increase from unit transactions 145,069 197,818 28,607 62,584 32,345 61,706 ---------- ---------- --------- -------- -------- -------- Net increase (decrease) in net assets............................ (109,177) (218,099) 34,340 88,845 (28,857) 33,795 Net assets beginning of period..... 1,170,224 1,388,323 597,663 508,818 242,506 208,711 ---------- ---------- --------- -------- -------- -------- Net assets end of period*.......... $1,061,047 $1,170,224 $ 632,003 $597,663 $213,649 $242,506 ========== ========== ========= ======== ======== ======== Unit transactions: Units outstanding beginning of period............................ 117,820 100,108 48,673 43,551 28,653 21,398 Units issued during the period..... 41,681 39,323 11,002 12,128 10,746 9,662 Units redeemed during the period... (25,842) (21,611) (8,597) (7,006) (6,249) (2,407) ---------- ---------- --------- -------- -------- -------- Units outstanding end of period.... 133,659 117,820 51,078 48,673 33,150 28,653 ========== ========== ========= ======== ======== ======== ---------- * Includes undistributed net investment income of: $ 297,310 $ 298,152 $ 188,619 $140,418 $ 3,220 $ 3,993 ========== ========== ========= ======== ======== ========
** Commencement of operations ***Amounts round to less than one. See notes to financial statements. F-124
MONYEquity Master ----------------------------------------------------------------------------------------------------------- Enterprise Accumulation Trust ----------------------------------------------------------------------------------------------------------- Capital Equity Growth and Appreciation Balanced Income Income Subaccount Subaccount Subaccount Subaccount ------------------------ ------------------------ ------------------------ --------------------------- For the period For the period For the year For the year For the year For the year For the year May 4, 2001** For the year June 19, 2001** ended ended ended ended ended through ended through December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ ------------ ------------ -------------- ------------ --------------- $ 2,242 $ 769 $ (709) $ (46) $ 9 $ 32 $ 34 $ 17 (30,279) (10,658) (4,626) (9,362) (61) (239) (16) (261) (121,571) (65,635) (13,383) (9,232) 39 0 (639) 100 --------- -------- -------- -------- ------ ------- ------ ------- (149,608) (75,524) (18,718) (18,640) (13) (207) (621) (144) --------- -------- -------- -------- ------ ------- ------ ------- 111,651 131,912 39,892 49,649 2,038 2,610 3,772 5,300 (88,568) (71,399) (15,274) (27,711) (767) (2,402) (259) (2,997) --------- -------- -------- -------- ------ ------- ------ ------- 23,083 60,513 24,618 21,938 1,271 208 3,513 2,303 --------- -------- -------- -------- ------ ------- ------ ------- (126,525) (15,011) 5,900 3,298 1,258 1 2,892 2,159 561,204 576,215 88,892 85,594 1 0 2,159 0 --------- -------- -------- -------- ------ ------- ------ ------- $ 434,679 $561,204 $ 94,792 $ 88,892 $1,259 $ 1 $5,051 $ 2,159 ========= ======== ======== ======== ====== ======= ====== ======= 65,041 58,400 11,976 9,254 0 0 231 0 16,007 14,623 5,724 6,340 239 263 438 556 (12,492) (7,982) (2,218) (3,618) (90) (263) (31) (325) --------- -------- -------- -------- ------ ------- ------ ------- 68,556 65,041 15,482 11,976 149 0*** 638 231 ========= ======== ======== ======== ====== ======= ====== ======= $ 1,914 $ (328) $ 2,526 $ 3,235 $ 41 $ 32 $ 51 $ 17 ========= ======== ======== ======== ====== ======= ====== =======
F-125 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
--------------------------- --------------------------- Multi-Cap Growth Subaccount -------------------------- For the period For the year May 18, 2001** ended through December 31, December 31, 2002 2001 ------------ -------------- From operations: Net Investment income (loss)...................... $ (42) $ (13) Net realized gain (loss) on investments........... (594) (41) Net change in unrealized appreciation (depreciation) of investments.................... (1,869) (134) ------- ------ Net increase (decrease) in net assets resulting from operations......................................... (2,505) (188) ------- ------ From unit transactions: Net proceeds from the issuance of units........... 7,011 5,378 Net asset value of units redeemed or used to meet contract obligations............................. (1,924) (179) ------- ------ Net increase (decrease) from unit transactions...... 5,087 5,199 ------- ------ Net increase (decrease) in net assets............... 2,582 5,011 Net assets beginning of period...................... 5,011 0 ------- ------ Net assets end of period*........................... $ 7,593 $5,011 ======= ====== Unit transactions: Units outstanding beginning of period............... 572 0 Units issued during the period...................... 1,063 594 Units redeemed during the period.................... (298) (22) ------- ------ Units outstanding end of period..................... 1,337 572 ======= ====== ---------- *Includes undistributed net investment income (loss) of: $ (55) $ (13) ======= ======
Small Company Mid-Cap Growth Growth Subaccount Subaccount ---------------------------- ---------------------------- For the period For the period For the year August 8, 2001** For the year August 8, 2001** ended through ended through December 31, December 31, December 31, December 31, 2002 2001 2002 2001 ------------ ---------------- ------------ ---------------- From operations: Net Investment income (loss)...................... $ (60) $ 100 $ (96) $ (7) Net realized gain (loss) on investments........... (144) (18) (350) (18) Net change in unrealized appreciation (depreciation) of investments.................... (1,383) 108 (4,547) (130) ------- ------ ------- ------ Net increase (decrease) in net assets resulting from operations......................................... (1,587) 190 (4,993) (155) ------- ------ ------- ------ From unit transactions: Net proceeds from the issuance of units........... 26,266 4,941 14,570 3,876 Net asset value of units redeemed or used to meet contract obligations............................. (1,045) (126) (998) (124) ------- ------ ------- ------ Net increase (decrease) from unit transactions...... 25,221 4,815 13,572 3,752 ------- ------ ------- ------ Net increase (decrease) in net assets............... 23,634 5,005 8,579 3,597 Net assets beginning of period...................... 5,005 0 3,597 0 ------- ------ ------- ------ Net assets end of period*........................... $28,639 $5,005 $12,176 $3,597 ======= ====== ======= ====== Unit transactions: Units outstanding beginning of period............... 476 0 379 0 Units issued during the period...................... 3,266 490 1,639 393 Units redeemed during the period.................... (129) (14) (144) (14) ------- ------ ------- ------ Units outstanding end of period..................... 3,613 476 1,874 379 ======= ====== ======= ====== ---------- *Includes undistributed net investment income (loss) of: $ 40 $ 100 $ (103) $ (7) ======= ====== ======= ======
** Commencement of operations ***Amounts round to less than one. See notes to financial statements. F-126
MONYEquity Master ----------------------------------------------------------------------------------------------------------------------------- Fidelity Variable Insurance Enterprise Accumulation Trust Products Funds ------------------------------------------- -------------------------- Dreyfus Worldwide Emerging Dreyfus Socially Responsible VIP Growth Countries Stock Index Growth Growth Subaccount Subaccount Subaccount Subaccount Subaccount ------------------------- --------------- ------------------------ -------------------------- -------------------------- For the period For the period For the period For the year June 13, 2001** July 24, 2002** For the year For the year For the year May 15, 2001** For the year For the year ended through through ended ended ended through ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2002 2001 2002 2001 2002 2001 ------------ --------------- --------------- ------------ ------------ ------------ -------------- ------------ ------------ $ (3) $(1) $ (4) $ 1,051 $ 1,376 $ (5) $ (1) $ (1,166) $ 10,867 (7) 0 854 (8,761) (9,710) (198) (9) (23,790) (28,799) (112) 0 0 (34,207) (8,258) (214) (8) (44,839) (18,560) ----- --- -------- -------- -------- ------ ---- -------- -------- (122) (1) 850 (41,917) (16,592) (417) (18) (69,795) (36,492) ----- --- -------- -------- -------- ------ ---- -------- -------- 588 1 69,048 78,362 103,848 1,810 469 101,516 109,238 (40) 0 (69,898) (31,262) (35,305) (838) (77) (47,964) (54,494) ----- --- -------- -------- -------- ------ ---- -------- -------- 548 1 (850) 47,100 68,543 972 392 53,552 54,744 ----- --- -------- -------- -------- ------ ---- -------- -------- 426 0 0 5,183 51,951 555 374 (16,243) 18,252 0 0 0 157,020 105,069 374 0 200,408 182,156 ----- --- -------- -------- -------- ------ ---- -------- -------- $ 426 $ 0 $ 0 $162,203 $157,020 $ 929 $374 $184,165 $200,408 ===== === ======== ======== ======== ====== ==== ======== ======== 0 0 0 19,709 11,492 44 0 26,701 19,810 62 0*** 8,613 11,471 12,533 242 53 16,821 13,854 (5) 0 (8,613) (4,754) (4,316) (132) (9) (8,093) (6,963) ----- --- -------- -------- -------- ------ ---- -------- -------- 57 0*** 0 26,426 19,709 154 44 35,429 26,701 ===== === ======== ======== ======== ====== ==== ======== ======== $ (4) $(1) $ (4) $ 4,134 $ 3,083 $ (6) $ (1) $ 9,159 $ 10,325 ===== === ======== ======== ======== ====== ==== ======== ========
F-127 MONY Variable Account L STATEMENT OF CHANGES IN NET ASSETS (continued)
MONYEquity Master -------------------------------------------------------------------------------- Fidelity Variable Insurance Products Funds Janus Aspen Series ---------------------------------------------------- -------------------------- VIP II VIP III Aggressive Contrafund Growth Opportunities Growth Subaccount Subaccount Subaccount ------------------------ -------------------------- -------------------------- For the period For the period For the year For the year For the year May 15, 2001** For the year May 15, 2001** ended ended ended through ended through December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 ------------ ------------ ------------ -------------- ------------ -------------- From operations: Net investment income (loss). $ (140) $ 2,023 $ 1 $ (7) $ (20) $ (9) Net realized loss on investments................ (3,569) (6,246) (41) (10) (228) (43) Net change in unrealized depreciation of investments (9,772) (7,106) (426) (140) (680) (317) -------- -------- ------ ------ ------ ------ Net decrease in net assets resulting from operations.... (13,481) (11,329) (466) (157) (928) (369) -------- -------- ------ ------ ------ ------ From unit transactions: Net proceeds from the issuance of units.......... 55,949 66,691 586 2,088 2,403 3,879 Net asset value of units redeemed or used to meet contract obligations....... (20,594) (23,568) (157) (88) (607) (186) -------- -------- ------ ------ ------ ------ Net increase from unit transactions................. 35,355 43,123 429 2,000 1,796 3,693 -------- -------- ------ ------ ------ ------ Net increase (decrease) in net assets................... 21,874 31,794 (37) 1,843 868 3,324 Net assets beginning of period 113,789 81,995 1,843 0 3,324 0 -------- -------- ------ ------ ------ ------ Net assets end of period*..... $135,663 $113,789 $1,806 $1,843 $4,192 $3,324 ======== ======== ====== ====== ====== ====== Unit transactions: Units outstanding beginning of period.................... 13,866 8,689 199 0 413 0 Units issued during the period 7,185 8,027 72 208 410 437 Units redeemed during the period....................... (2,661) (2,850) (20) (9) (94) (24) -------- -------- ------ ------ ------ ------ Units outstanding end of period....................... 18,390 13,866 251 199 729 413 ======== ======== ====== ====== ====== ====== ---------- * Includes undistributed net investment income (loss) of: $ 1,628 $ 1,768 $ (6) $ (7) $ (29) $ (9) ======== ======== ====== ====== ====== ======
See notes to financial statements. F-128
MONYEquity Master --------------------------------------------------------------------------------------------------------- Janus Aspen Series ------------------------------------------------------------------------------- Capital Worldwide Balanced Appreciation Growth Subaccount Subaccount Subaccount Total --------------------------- ------------------------ ------------------------ ------------------------ For the period For the year June 13, 2001** For the year For the year For the year For the year For the year For the year ended through ended ended ended ended ended ended December 31, December 31, December 31, December 31, December 31, December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 2002 2001 ------------ --------------- ------------ ------------ ------------ ------------ ------------ ------------ $ 589 $ 312 $ (368) $ 1,386 $ 576 $ (469) $ 152,415 $ 2,903,267 (44) (59) (29,905) (23,108) (25,537) (45,597) (2,228,080) (2,660,547) (1,614) (561) (14,198) (36,977) (45,044) (9,729) (2,928,409) (3,179,263) ------- ------- -------- -------- -------- -------- ----------- ----------- (1,069) (308) (44,471) (58,699) (70,005) (55,795) (5,004,074) (2,936,543) ------- ------- -------- -------- -------- -------- ----------- ----------- 28,369 14,889 114,798 126,828 124,702 150,378 6,327,343 6,666,192 (478) (533) (75,508) (50,973) (59,362) (68,469) (4,403,009) (3,709,036) ------- ------- -------- -------- -------- -------- ----------- ----------- 27,891 14,356 39,290 75,855 65,340 81,909 1,924,334 2,957,156 ------- ------- -------- -------- -------- -------- ----------- ----------- 26,822 14,048 (5,181) 17,156 (4,665) 26,114 (3,079,740) 20,613 14,048 0 258,029 240,873 238,479 212,365 24,067,204 24,046,591 ------- ------- -------- -------- -------- -------- ----------- ----------- $40,870 $14,048 $252,848 $258,029 $233,814 $238,479 $20,987,464 $24,067,204 ======= ======= ======== ======== ======== ======== =========== =========== 1,435 0 39,919 28,955 38,546 26,409 3,115 1,491 19,911 18,374 24,311 22,493 (54) (56) (13,087) (7,410) (11,734) (10,356) ------- ------- -------- -------- -------- -------- 4,496 1,435 46,743 39,919 51,123 38,546 ======= ======= ======== ======== ======== ======== $ 901 $ 312 $ 2,570 $ 2,938 $ 8,294 $ 7,718 $11,334,852 $11,182,437 ======= ======= ======== ======== ======== ======== =========== ===========
F-129 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS 1. Organization and Business: MONY Variable Account L (the "Variable Account") is a separate investment account established on November 28, 1990 by MONY Life Insurance Company ("MONY"), under the laws of the State of New York. The Variable Account operates as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). The Variable Account holds assets that are segregated from all of MONY's other assets and, at present, is used only to support Variable Life Insurance policies (Strategist), Variable Universal Life Insurance policies (MONYEquity Master, MONY Custom Equity Master, MONY Custom Estate Master and MONY Variable Universal Life) and MONY Survivorship Variable Universal Life These policies are issued by MONY. For presentation purposes, the information related to the Variable Life (Strategist) and Variable Universal Life (MONYEquity Master) Insurance policies is presented here. There are currently six Strategist subaccounts and twenty-eight MONYEquity Master subaccounts available within the Variable Account each of which invests only in a corresponding portfolio of the MONY Series Fund, Inc. (the "Fund"), the Enterprise Accumulation Trust ("Enterprise"), Dreyfus Stock Index Fund, Dreyfus Socially Responsible Growth Fund, Inc., Fidelity Variable Insurance Products Funds, or Janus Aspen Series (collectively, the "Funds"). The Funds are registered under the 1940 Act as open-end, diversified, management investment companies. The Fund and Enterprise are affiliated with MONY. These financial statements should be read in conjunction with the financial statements and footnotes of the Funds, which were distributed by MONY to the policyholders. 2. Significant Accounting Policies: The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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 each of the respective Funds' portfolios is stated at value which is the net asset value of the respective portfolio as reported by such portfolio. Net asset values are based upon market or fair valuations of the securities held in each of the corresponding portfolios of the Funds. For the Money Market Portfolio, the net asset value is based on amortized cost of the securities held, which approximates market value. Investment Transactions and Investment Income: Investments in the portfolios of the Funds are recorded on the trade date. Realized gains and losses on redemption of investments in the portfolios of the Funds are determined on the identified cost basis. Dividend income and distributions of net realized gains are recorded on the ex-dividend date. Investment income includes dividends from net investment income and distributions of net realized gains received from the respective portfolios of the Funds. Dividends and distributions received are reinvested in additional shares of the respective portfolios of the Funds. Taxes: MONY is currently taxed as a life insurance company and will include the Variable Account's operations in its tax return. MONY does not expect, based upon current tax law, to incur any income tax burden upon the earnings or realized gains attributable to the Variable Account. Based on this expectation, no charges are currently being deducted from the Variable Account for Federal income tax purposes. F-130 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 3. Related Party Transactions: MONY is the legal owner of the assets of the Variable Account. Policy premiums received from MONY by the Variable Account represent gross policy premiums recorded by MONY less deductions retained as compensation for certain sales distribution expenses and premium taxes. The cost of insurance, administration charges, and, if applicable, the cost of any optional benefits added by riders to the insurance policies are deducted monthly from the cash value of the contract to compensate MONY. A surrender charge may be imposed by MONY when a full or partial surrender is requested by the policyholders. These deductions are treated as contractholder redemptions by the Variable Account. The amount deducted for such purposes from all Strategist and MONYEquity Master subaccounts for the year ended December 31, 2002 aggregated $ 3,281,655. MONY receives from the Variable Account the amounts deducted for mortality and expense risks at an annual rate of 0.60% (for each of the Strategist Subaccounts) and 0.75% (for each of the MONYEquity Master Subaccounts) of the average daily net assets of the respective subaccounts. MONY Life Insurance Company of America (MONY America), a wholly-owned subsidiary of MONY, acts as investment adviser to the Fund and receives amounts paid by the Fund for those services. Enterprise Capital Management, Inc., a wholly-owned subsidiary of MONY, acts as investment adviser to the portfolios of Enterprise, and it receives amounts paid by Enterprise for those services. MONY and MONY America receive fees directly from certain Funds for maintaining and servicing policyholders' accounts. During the year ended December 31, 2002, MONY received $1,430 in aggregate from certain Funds in connection with Strategist and MONYEquity Master subaccounts. 4. Investment Transactions: Cost of shares acquired and proceeds from shares redeemed by each subaccount during the period ended December 31, 2002 were as follows:
Cost of Shares Acquired Proceeds from (Excludes Reinvestments) Shares Redeemed ------------------------ --------------- Strategist Subaccounts MONY Series Fund, Inc. Equity Growth Portfolio......... $ 23,048 $ 21,517 Equity Income Portfolio......... 13,909 6,618 Intermediate Term Bond Portfolio 7,558 701 Long Term Bond Portfolio........ 7,635 2,660 Diversified Portfolio........... 1,686 3,203 Money Market Portfolio.......... 182 28,540 MONYEquity Master Subaccounts MONY Series Fund, Inc. Government Securities Portfolio. 125,042 51,692 Intermediate Term Bond Portfolio 79,918 21,677 Long Term Bond Portfolio........ 62,795 48,710 Money Market Portfolio.......... 365,088 201,876 Enterprise Accumulation Trust Equity Portfolio................ 1,225,587 736,308 Small Company Value Portfolio... 759,698 556,400
F-131 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued)
Cost of Shares Acquired Proceeds from (Excludes Reinvestments) Shares Redeemed 4. Investment Transactions: (continued) ------------------------ --------------- Managed Portfolio............................. $1,415,801 $1,202,526 International Growth Portfolio................ 309,760 172,984 High Yield Bond Portfolio..................... 108,228 83,990 Growth Portfolio.............................. 69,719 39,001 Growth and Income Portfolio................... 101,804 82,252 Capital Appreciation Portfolio................ 37,393 13,452 Balanced Portfolio............................ 1,944 677 Equity Income Portfolio....................... 3,687 200 Multi-Cap Growth Portfolio.................... 6,698 1,651 Small Company Growth Portfolio................ 26,149 979 Mid-Cap Growth Portfolio...................... 14,440 958 Worldwide Growth Portfolio.................... 589 44 Emerging Countries Portfolio.................. 69,047 69,901 Dreyfus Dreyfus Stock Index Fund...................... 69,638 23,665 Dreyfus Socially Responsible Growth Fund, Inc. 1,657 692 Fidelity Variable Insurance Products Funds VIP Growth Portfolio.......................... 92,163 39,973 VIP II Contrafund Portfolio................... 51,014 16,556 VIP III Growth Opportunities Portfolio........ 578 163 Janus Aspen Series Aggressive Growth Portfolio................... 2,389 612 Balanced Portfolio............................ 28,255 483 Capital Appreciation Portfolio................ 103,355 65,865 Worldwide Growth Portfolio.................... 108,935 45,257
5. Financial Highlights: For a unit outstanding throughout the period ended December 31, 2002:
At December 31, 2002 For the period ended December 31, 2002 ------------------------ ------------------------------------ Investment Unit Net Assets Income Expense Total Strategist Subaccounts Units Values (000s) Ratio* Ratio** Return*** ---------------------- ------ ------ ---------- ---------- ------- --------- MONY Series Fund, Inc. Equity Growth Subaccount......... 1,027 $41.76 $ 43 0.59% 0.60% (23.15)% Equity Income Subaccount......... 950 42.35 40 1.70 0.60 (15.65) Intermediate Term Bond Subaccount 544 28.59 16 2.91 0.60 8.67 Long Term Bond Subaccount........ 626 36.08 23 3.97 0.60 13.39 Diversified Subaccount........... 2,043 35.24 72 2.07 0.60 (16.87) Money Market Subaccount.......... 877 20.69 18 1.49 0.60 0.93 MONYEquity Master Subaccounts ----------------------------- MONY Series Fund, Inc. Government Securities Subaccount. 22,488 13.68 308 2.82 0.75 5.80 Intermediate Term Bond Subaccount 13,508 14.21 192 3.32 0.75 8.56 Long Term Bond Subaccount........ 22,745 15.36 349 4.32 0.75 13.27 Money Market Subaccount.......... 53,939 12.51 675 1.48 0.75 0.72
F-132 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2002 For the period ended December 31, 2002 5. Financial Highlights: (continued) ------------------------- ------------------------------------ Investment Unit Net Assets Income Expense Total Strategist Subaccounts Units Values (000s) Ratio* Ratio** Return*** ---------------------- ------- ------ ---------- ---------- ------- --------- Enterprise Accumulation Trust Equity Subaccount............................. 585,851 $ 8.39 $ 4,913 0.00% 0.75% (29.91)% Small Company Value Subaccount................ 216,070 19.10 4,127 0.37 0.75 (9.91) Managed Subaccount............................ 652,248 10.60 6,916 0.95 0.75 (21.83) International Growth Subaccount............... 133,659 7.94 1,061 0.68 0.75 (20.04) High Yield Bond Subaccount.................... 51,078 12.37 632 8.66 0.75 0.73 Growth Subaccount............................. 33,150 6.45 214 0.41 0.75 (23.76) Growth and Income Subaccount.................. 68,556 6.34 435 1.22 0.75 (26.54) Capital Appreciation Subaccount............... 15,482 6.12 95 0.00 0.75 (17.52) Balanced Subaccount........................... 149 8.47 1 2.10 0.75 (7.73) Equity Income Subaccount...................... 638 7.91 5 1.66 0.75 (15.40) Multi-Cap Growth Subaccount................... 1,337 5.68 8 0.00 0.75 (35.16) Small Company Growth Subaccount............... 3,613 7.93 29 0.00 0.75 (24.55) Mid-Cap Growth Subaccount..................... 1,874 6.50 12 0.00 0.75 (31.51) Worldwide Growth Subaccount................... 57 7.42 426 0.00 0.75 (25.87) Emerging Countries Subaccount................. 0 0 0 0.00 0.75 (21.50) Dreyfus Dreyfus Stock Index Subaccount................ 26,426 6.14 162 1.42 0.75 (22.56) Dreyfus Socially Responsible Growth Subaccount 154 6.04 1 0.21 0.75 (29.52) Fidelity Variable Insurance Products Funds VIP Growth Subaccount......................... 35,429 5.20 184 0.13 0.75 (30.76) VIP II Contrafund Subaccount.................. 18,390 7.38 136 0.64 0.75 (10.11) VIP III Growth Opportunities Subaccount....... 251 7.19 2 0.80 0.75 (22.44) Janus Aspen Series Aggressive Growth Subaccount.................. 729 5.75 4 0.00 0.75 (28.48) Balanced Subaccount........................... 4,496 9.09 41 4.15 0.75 (7.15) Capital Appreciation Subaccount............... 46,743 5.41 253 0.60 0.75 (16.25) Worldwide Growth Subaccount................... 51,123 4.57 234 1.00 0.75 (26.17)
---------- * This ratio represents the amount of dividend income, excluding distributions from net realized gains, received by the subaccount from the underlying fund, net of investment advisory fees assessed by the underlying fund's investment adviser and other expenses of the underlying fund, divided by the average net assets of the subaccount. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the net asset value per Unit. The recognition of dividend income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. ** This ratio represents the annual contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratio includes only those expenses that result in a direct reduction to net asset value per Unit. Charges made directly to contractholder accounts by redemption of Units and expenses of the respective underlying fund are excluded from this ratio. ***Represents the total return for the period indicated, including changes in the value of the underlying fund, and reflects deductions for all items included in the Expense Ratio. The Total Return does not include any expenses assessed through the redemption of Units; the Total Return would have been lower had such expenses been included in the calculation. Total returns for periods less than one year are not annualized. (^)Annualized. (^^)Amounts round to less than one thousand. F-133 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 5. Financial Highlights: (continued) For a unit outstanding throughout the period ended December 31, 2001:
At December 31, 2001 For the period ended December 31, 2001 --------------------------- ----------------------------------- Investment Unit Net Assets Income Expense Total Strategist Subaccounts Units Values (000s) Ratio* Ratio** Return*** ---------------------- ------- ------ ---------- ---------- ------- --------- MONY Series Fund, Inc. Equity Growth Subaccount.......................... 1,054 $54.34 $ 57 0.00% 0.60% (19.79)% Equity Income Subaccount.......................... 815 50.21 41 1.71 0.60 (11.52) Intermediate Term Bond Subaccount................. 295 26.31 8 5.27 0.60 7.87 Long Term Bond Subaccount......................... 478 31.82 15 5.16 0.60 5.68 Diversified Subaccount............................ 2,071 42.39 88 1.13 0.60 (15.93) Money Market Subaccount........................... 2,246 20.50 46 3.44 0.60 3.17 MONYEquity Master Subaccounts ----------------------------- MONY Series Fund, Inc. Government Securities Subaccount.................. 16,863 12.93 218 4.35 0.75 5.81 Intermediate Term Bond Subaccount................. 9,128 13.09 119 4.84 0.75 7.74 Long Term Bond Subaccount......................... 21,528 13.56 292 4.92 0.75 5.53 Money Market Subaccount........................... 40,522 12.42 503 3.59 0.75 3.07 Enterprise Accumulation Trust Equity Subaccount................................. 532,023 11.97 6,370 0.00 0.75 (19.45) Small Company Value Subaccount.................... 204,616 21.20 4,339 0.26 0.75 4.33 Managed Subaccount................................ 631,443 13.56 8,562 2.19 0.75 (11.83) International Growth Subaccount................... 117,820 9.93 1,170 0.68 0.75 (28.41) High Yield Bond Subaccount........................ 48,673 12.28 598 8.85 0.75 5.14 Growth Subaccount................................. 28,653 8.46 243 0.48 0.75 (13.23) Growth and Income Subaccount...................... 65,041 8.63 561 0.89 0.75 (12.56) Capital Appreciation Subaccount................... 11,976 7.42 89 0.70 0.75 (19.78) Balanced Subaccount (1)........................... 0(^^) 9.18 0(^^^) 4.18(^) 0.75(^) (8.20) Equity Income Subaccount (2)...................... 231 9.35 2 1.66(^) 0.75(^) (6.50) Multi-Cap Growth Subaccount (3)................... 572 8.76 5 0.00(^) 0.75(^) (12.40) Small Company Growth Subaccount (4)............... 476 10.51 5 0.00(^) 0.75(^) 5.10 Mid-Cap Growth Subaccount (4)..................... 379 9.49 4 0.00(^) 0.75(^) (5.10) Worldwide Growth Subaccount (5)................... 0(^^) 10.01 0(^^^) 0.00(^) 0.75(^) 0.10 Dreyfus Dreyfus Stock Index Subaccount.................... 19,709 7.96 157 0.51 0.75 (12.91) Dreyfus Socially Responsible Growth Subaccount (6) 44 8.57 0(^^^) 0.00(^) 0.75(^) (14.30) Fidelity Variable Insurance Products Funds VIP Growth Subaccount............................. 26,701 7.51 200 0.00 0.75 (18.37) VIP II Contrafund Subaccount...................... 13,866 8.21 114 0.59 0.75 (13.03) VIP III Growth Opportunities Subaccount (6)....... 199 9.27 2 0.00(^) 0.75(^) (7.30) Janus Aspen Series Aggressive Growth Subaccount (6).................. 413 8.04 3 0.00(^) 0.75(^) (19.60) Balanced Subaccount (5)........................... 1,435 9.79 14 4.93(^) 0.75(^) (2.10) Capital Appreciation Subaccount................... 39,919 6.46 258 1.34 0.75 (22.36) Worldwide Growth Subaccount....................... 38,546 6.19 238 0.53 0.75 (23.01)
---------- * This ratio represents the amount of dividend income, excluding distributions from net realized gains, received by the subaccount from the underlying fund, net of investment advisory fees assessed by the underlying fund's investment adviser F-134 MONY Variable Account L NOTES TO FINANCIAL STATEMENTS (continued) 5. Financial Highlights: (continued) and other expenses of the underlying fund, divided by the average net assets of the subaccount. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the net asset value per Unit. The recognition of dividend income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the subaccounts invest. ** This ratio represents the annual contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratio includes only those expenses that result in a direct reduction to net asset value per Unit. Charges made directly to contractholder accounts by redemption of Units and expenses of the respective underlying fund are excluded from this ratio. ***Represents the total return for the period indicated, including changes in the value of the underlying fund, and reflects deductions for all items included in the Expense Ratio. The Total Return does not include any expenses assessed through the redemption of Units; the Total Return would have been lower had such expenses been included in the calculation. Total returns for periods less than one year are not annualized. (^)Annualized. (^^)Amounts round to less than one. (^^^)Amounts round to less than one thousand. (1)For the period May 4, 2001 (commencement of operations) through December 31, 2001. (2)For the period June 19, 2001 (commencement of operations) through December 31, 2001. (3)For the period May 18, 2001 (commencement of operations) through December 31, 2001. (4)For the period August 8, 2001 (commencement of operations) through December 31, 2001. (5)For the period June 13, 2001 (commencement of operations) through December 31, 2001. (6)For the period May 15, 2001 (commencement of operations) through December 31, 2001. F-135 [THIS PAGE INTENTIONALLY LEFT BLANK] F-136 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of MONY Life Insurance Company and the Contractholders of Subaccounts of MONY Variable Account L In our opinion, the accompanying combined statements of assets and liabilities and the related combined statements of operations and of changes in net assets present fairly, in all material respects, the combined financial position of Subaccounts of MONY Variable Account L at December 31, 2002, and the combined results of their operations and the changes in their combined net assets for the periods presented, in conformity with accounting principles generally accepted in the United States of America. These combined financial statements are the responsibility of MONY Life Insurance Company's management; our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits of these combined financial statements in accordance with auditing standards generally accepted in the United States of America, 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 investments at December 31, 2002 by correspondence with the underlying funds' transfer agents, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York April 8, 2003 F-137 MONY Variable Account L COMBINED STATEMENT OF ASSETS AND LIABILITIES December 31, 2002 ASSETS Investments at cost........... $ 48,466,630 ============ Investments in Funds, at net asset value................. $ 34,409,331 Amounts due from MONY......... 17,565 Amounts due from Funds........ 18,094 ------------ Total assets........... 34,444,990 ------------ LIABILITIES Amounts due to MONY........... 39,267 Amounts due to Funds.......... 17,565 ------------ Total liabilities...... 56,832 ------------ Net assets.................... $ 34,388,158 ============ Net assets consist of: Contractholders' net payments................... $ 43,105,864 Undistributed net investment income.......... 12,046,503 Accumulated net realized loss on investments........ (6,706,910) Net unrealized depreciation of investments............. (14,057,299) ------------ Net assets.................... $ 34,388,158 ============
See notes to combined financial statements. F-138 MONY Variable Account L COMBINED STATEMENT OF OPERATIONS For the year ended December 31, 2002 Dividend income................ $ 321,281 Distributions from net realized gains............... 151,524 Mortality and expense risk charges...................... (226,269) ----------- Net investment income.......... 246,536 ----------- Realized and unrealized loss on investments: Net realized loss on investments................. (2,795,359) Net change in unrealized depreciation of investments. (4,605,944) ----------- Net realized and unrealized loss on investments.......... (7,401,303) ----------- Net decrease in net assets resulting from operations.... $(7,154,767) ===========
See notes to combined financial statements. F-139 MONY Variable Account L COMBINED STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31,
2002 2001 ----------- ----------- From operations: Net investment income........ $ 246,536 $ 3,231,474 Net realized loss on investments................ (2,795,359) (3,270,716) Net change in unrealized depreciation of investments (4,605,944) (3,560,698) ----------- ----------- Net decrease in net assets resulting from operations.... (7,154,767) (3,599,940) ----------- ----------- From unit transactions: Net proceeds from the issuance of units of subaccounts................ 15,967,812 15,851,567 Net asset value of units redeemed or used to meet contract obligations of subaccounts................ (7,889,695) (5,925,950) ----------- ----------- Net increase from unit transactions of subaccounts.. 8,078,117 9,925,617 ----------- ----------- Net increase in net assets.... 923,350 6,325,677 Net assets beginning of year.. 33,464,808 27,139,131 ----------- ----------- Net assets end of year*....... $34,388,158 $33,464,808 =========== =========== ---------- *Includes undistributed net investment income of: $12,046,503 $11,799,967 =========== ===========
See notes to combined financial statements. F-140 MONY Variable Account L NOTES TO COMBINED FINANCIAL STATEMENTS 1. Organization and Business: MONY Variable Account L (the "Variable Account") is a separate investment account established on November 28, 1990 by MONY Life Insurance Company ("MONY"), under the laws of the State of New York. The Variable Account operates as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). The Variable Account holds assets that are segregated from all of MONY's other assets and, at present, is used only to support Flexible Payment Variable Life Insurance Policies (Strategist), Variable Universal Life Insurance policies (MONYEquity Master, MONY Custom Equity Master, MONY Custom Estate Master and MONY Variable Universal Life), and Survivorship Variable Universal Life Insurance policies, collectively, the "Variable Life Insurance Policies". These policies are issued by MONY. For presentation purposes, the information related to all Variable Life Insurance policies issued under the Variable Account is presented for the Variable Account as a whole. There are currently available twenty-eight MONYEquity Master subaccounts, six Strategist subaccounts, thirty-five MONY Custom Equity Master subaccounts, thirty-five MONY Custom Estate Master subaccounts, thirty-five Variable Universal Life subaccounts, and thirty-five Survivorship Universal Life subaccounts within the Variable Account (each hereafter referred to as a "subaccount"). Each subaccount holds assets that are segregated from all other subaccounts within the Variable Account. Each subaccount invests only in a corresponding portfolio of the MONY Series Fund, Inc. (the "Fund"), the Enterprise Accumulation Trust ("Enterprise"), Dreyfus Stock Index Fund, Dreyfus Socially Responsible Growth Fund, Inc., Fidelity Variable Insurance Products Funds, Janus Aspen Series, Alger American Fund, INVESCO Variable Investment Funds, Inc., PIMCO Variable Insurance Trust, MFS Variable Insurance Trust, Lord Abbett Series Funds, PBHG Insurance Series Funds and The Universal Institutional Funds Inc. (collectively, the "Funds"). The Funds are registered under the 1940 Act as open-end, diversified, management investment companies. The Fund and Enterprise are affiliated with MONY. These combined financial statements should be read in conjunction with the separate financial statements and footnotes of each of the Variable Insurance Policies which are presented on pages before these combined financial statements. 2. Significant Accounting Policies: The preparation of the combined financial statements in accordance with accounting principles generally accepted in the United States of America 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 held by each subaccount in the shares of each of the respective Funds' portfolios is stated at value which is the net asset value of the respective portfolio as reported by such portfolio. Net asset values are based upon market or fair valuations of the securities held in each of the corresponding portfolios of the Funds. For the Money Market Portfolio, the net asset value is based on the amortized cost of the securities held, which approximates market value. For the purposes of presentation of the combined financial statements, investments held at December 31, 2002 by all of the subaccounts within the Variable Account have been aggregated. Investment Transactions and Investment Income: Investments made by the subacccounts in the portfolios of the Funds are recorded on the trade date. Realized gains and losses on redemption of investments by the subaccounts in the portfolios of the Funds are determined on the identified cost-basis. Dividend income and distributions of net realized gains are recorded by the respective subaccount on ex-dividend date. Investment F-141 MONY Variable Account L NOTES TO COMBINED FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies: (continued) income includes dividends from net investment income and distributions of net realized gains received from the respective portfolios of the Funds. Dividends and distributions received by the subaccounts are reinvested in additional shares of the respective portfolios of the Funds. Taxes: MONY is currently taxed as a life insurance company and will include the Variable Account's operations in its tax return. MONY does not expect, based upon current tax law, to incur any income tax burden upon the earnings or realized gains attributable to the Variable Account. Based on this expectation, no charges are currently being deducted from the Variable Account for Federal income tax purposes. 3. Related Party Transactions: MONY is the legal owner of the assets of the Variable Account. Policy premiums received from MONY by the Variable Account represent gross policy premiums recorded by MONY less deductions retained as compensation for certain sales distribution expenses and premium taxes. The cost of insurance, administration charges, and, if applicable, the cost of any optional benefits added by riders to the insurance policies are deducted monthly from the cash value of the contract to compensate MONY. A surrender charge may be imposed by MONY when a full or partial surrender is requested by the policyholders. These deductions are treated by the Variable Account as contractholder redemptions. For the period ended December 31, 2002 the aggregate amount deducted for such purposes for all subaccounts within the Variable Account was $5,496,975. MONY receives from the subaccounts within the Variable Account amounts deducted for mortality and expense risks at annual rates ranging from .35% to .75% of the average daily net assets of each of the respective subaccounts within the Variable Account. MONY Life Insurance Company of America (MONY America), a wholly-owned subsidiary of MONY acts as investment adviser to the Fund and receives amounts paid by the Fund for those services. Enterprise Capital Management, Inc., a wholly-owned subsidiary of MONY, acts as investment adviser to Enterprise, and it receives amounts paid by Enterprise for those services. MONY America and MONY receive fees directly from certain Funds for maintaining and servicing policyholders' accounts. During the year ended December 31, 2002, MONY received $6,934 in aggregate from certain Funds in connection with the subaccounts within the Variable Account. 4. Other: At December 31, 2002, the aggregate net assets of all subaccounts within the Variable Account investing in a portfolio of the Funds were as follows: MONY Series Fund, Inc. Intermediate Term Bond Subaccount................................ $ 348,125 Long Term Bond Subaccount........................................ 608,278 Government Securities Subaccount................................. 646,908 Money Market Subaccount.......................................... 3,311,902 Equity Growth Subaccount......................................... 42,889 Equity Income Subaccount......................................... 40,218 Diversified Subaccount........................................... 71,984
F-142 MONY Variable Account L NOTES TO COMBINED FINANCIAL STATEMENTS (continued) 4. Other: (continued) Enterprise Accumulation Trust Equity Subaccount............................. $5,617,710 Small Company Value Subaccount................ 4,678,930 Managed Subaccount............................ 7,280,433 International Growth Subaccount............... 1,206,003 High Yield Bond Subaccount.................... 815,575 Growth Subaccount............................. 1,094,767 Growth and Income Subaccount.................. 1,050,461 Small Company Growth Subaccount............... 444,022 Equity Income Subaccount...................... 172,588 Capital Appreciation Subaccount............... 422,588 Multi-Cap Growth Subaccount................... 421,929 Balanced Subaccount........................... 97,975 Worldwide Growth Subaccount................... 8,974 Emerging Countries Subaccount................. 4,283 Mid-Cap Growth Subaccount..................... 42,309 Global Socially Responsive Subaccount......... 18,779 Total Return Subaccount....................... 37,015 Dreyfus Dreyfus Stock Index Subaccount................ 1,016,822 Dreyfus Socially Responsible Growth Subaccount 118,570 Fidelity Variable Insurance Products Funds VIP Growth Subaccount......................... 670,188 VIP II Contrafund Subaccount.................. 567,676 VIP III Growth Opportunities Subaccount....... 101,196 Janus Aspen Series Aggressive Growth Subaccount.................. 492,821 Balanced Subaccount........................... 429,475 Capital Appreciation Subaccount............... 654,431 Flexible Income Subaccount.................... 30,963 International Growth Subaccount............... 53,843 Worldwide Growth Subaccount................... 807,215 Strategic Value Subaccount.................... The Alger American Funds Balanced Subaccount........................... 32,170 Mid Cap Growth Subaccount..................... 57,622
F-143 MONY Variable Account L NOTES TO COMBINED FINANCIAL STATEMENTS (continued) 4. Other: (continued) Invesco Variable Investment Fund Financial Services Subaccount............... $ 14,614 Health Services Subaccount.................. 19,986 Telecommunications Subaccount............... 7,219 MFS Variable Insurance Trust Mid Cap Growth Subaccount................... 28,040 New Discovery Series Subaccount............. 35,286 Total Return Series Subaccount.............. 72,442 Utilities Series Subaccount................. 8,396 The Universal Institutional Funds, Inc. Emerging Equities Subaccount................ 24,717 Global Value Equity Subaccount.............. 3,817 U.S. Real Estate Subaccount................. 67,881 Lord Abbett Series Funds Bond Debenture Subaccount................... 22,543 Growth and Income Subaccount................ 76,793 Mid-Cap Value Subaccount.................... 64,476 PIMCO Variable Insurance Trust Global Bond Subaccount...................... 56,846 Real Return Subaccount...................... 139,351 StocksPlus Growth and Income Subaccount..... 134,061 PBHG Insurance Series Funds Mid-Cap Value Subaccount.................... 77,598 Select Value Subaccount..................... 16,455 ----------- Total Net Asset--Combined Variable Account L 34,388,158 ===========
During the year ended December 31, 2002, the aggregate cost of shares purchased (excluding reinvestments) and the aggregate proceeds from shares redeemed of the portfolios of the Funds by all the subaccounts within the Variable Account were $16,166,059 and $8,303,496 respectively. F-144 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholder of MONY Life Insurance Company: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and comprehensive income, statements of changes in shareholder's equity and statements of cash flows present fairly, in all material respects, the financial position of MONY Life Insurance Company and Subsidiaries (the "Company") at December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 3 to the consolidated financial statements, the Company changed its method of accounting for intangible and long-lived assets in 2002. PricewaterhouseCoopers LLP New York, New York February 6, 2003 F-145 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2002 and 2001
2002 2001 --------- --------- ($ in millions) ASSETS Investments: Fixed maturity securities available-for-sale, at fair value (Note 5)....................... $ 7,828.2 $ 6,973.5 Equity securities available-for-sale, at fair value (Note 5)............................... 247.7 297.5 Mortgage loans on real estate (Note 6)..................................................... 1,877.4 1,809.7 Policy loans............................................................................... 1,212.5 1,229.0 Real estate to be disposed of.............................................................. 26.8 172.3 Real estate held for investment............................................................ 180.2 58.5 Other invested assets...................................................................... 97.3 116.7 --------- --------- 11,470.1 10,657.2 Cash and cash equivalents................................................................... 223.7 305.0 Accrued investment income................................................................... 204.0 192.9 Amounts due from reinsurers................................................................. 695.2 595.8 Premiums receivable......................................................................... 7.3 11.1 Deferred policy acquisition costs (Note 8).................................................. 1,226.4 1,233.8 Other assets................................................................................ 528.6 569.7 Assets transferred in Group Pension Transaction (Note 11)................................... -- 4,650.4 Separate account assets..................................................................... 4,140.6 5,195.2 --------- --------- Total assets......................................................................... $18,495.9 $23,411.1 ========= ========= LIABILITIES AND SHAREHOLDER'S EQUITY Future policy benefits...................................................................... $ 7,949.9 $ 7,870.0 Policyholders' account balances............................................................. 2,779.7 2,337.1 Other policyholders' liabilities............................................................ 289.2 281.1 Amounts due to reinsurers................................................................... 67.7 74.6 Accounts payable and other liabilities...................................................... 735.8 686.7 Long term debt (Note 14).................................................................... 216.9 216.9 Current federal income taxes payable........................................................ 106.1 109.1 Deferred federal income taxes............................................................... 239.1 143.6 Liabilities transferred in Group Pension Transaction (Note 11).............................. -- 4,597.1 Separate account liabilities................................................................ 4,137.6 5,192.3 --------- --------- Total liabilities.................................................................... 16,522.0 21,508.5 Commitments and contingencies (Note 16) Common stock, $1.00 par value; 2.5 million shares authorized; 2.5 million shares issued and outstanding at December 31, 2002 and 2001, respectively.................................. 2.5 2.5 Capital in excess of par.................................................................... 1,753.6 1,628.6 Retained earnings........................................................................... 137.8 233.4 Accumulated other comprehensive income...................................................... 80.0 38.1 --------- --------- Total shareholder's equity........................................................... 1,973.9 1,902.6 --------- --------- Total liabilities and shareholder's equity........................................... $18,495.9 $23,411.1 ========= =========
See accompanying notes to consolidated financial statements. F-146 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Years Ended December 31, 2002, 2001, and 2000
2002 2001 2000 -------- -------- -------- ($ in millions) Revenues: Premiums......................................................... $ 690.4 $ 695.3 $ 700.5 Universal life and investment-type product policy fees........... 200.5 207.2 205.8 Net investment income (Note 4)................................... 725.4 676.9 970.9 Net realized (losses)/gains on investments (Note 4).............. (151.1) (12.3) 37.5 Group Pension Profits (Note 11).................................. 82.3 30.7 37.1 Other income..................................................... 169.3 189.1 223.3 -------- -------- -------- 1,716.8 1,786.9 2,175.1 -------- -------- -------- Benefits and expenses: Benefits to policyholders........................................ 803.1 814.7 787.8 Interest credited to policyholders' account balances............. 119.3 110.5 110.6 Amortization of deferred policy acquisition costs................ 156.1 158.8 139.1 Dividends to policyholders....................................... 188.0 236.6 235.5 Other operating costs and expenses............................... 459.4 519.4 503.3 -------- -------- -------- 1,725.9 1,840.0 1,776.3 -------- -------- -------- (Loss)/income from continuing operations before income taxes and extraordinary item............................................. (9.1) (53.1) 398.8 Income tax (benefit)/expense..................................... (6.0) (19.1) 134.8 -------- -------- -------- (Loss)/income from continuing operations before extraordinary item........................................................... (3.1) (34.0) 264.0 Discontinued operations: loss from real estate to be disposed of, net of income tax benefit of $1.4 million.................. (2.5) -- -- Extraordinary item (Note 14)..................................... -- -- 37.7 -------- -------- -------- Net (loss)/income................................................ (5.6) (34.0) 226.3 Other comprehensive income, net (Note 4)......................... 41.9 25.1 42.4 -------- -------- -------- Comprehensive income/(loss)...................................... $ 36.3 $ (8.9) $ 268.7 ======== ======== ========
See accompanying notes to consolidated financial statements. F-147 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY Years Ended December 31, 2002, 2001, and 2000
Accumulated Capital in Other Total Common Excess of Retained Comprehensive Shareholder's Stock Par Earnings Income Equity ------ ---------- -------- ------------- ------------- ($ in millions) Balance, December 31, 1999............................................ $2.5 $1,563.6 $ 256.1 $(29.4) $1,792.8 Dividends............................................................. -- -- (100.0) -- (100.0) Capital Contribution.................................................. -- 65.0 -- -- 65.0 Comprehensive income: Net income.......................................................... -- -- 226.3 -- 226.3 Other comprehensive income: Unrealized losses on investments net of unrealized gains, reclassification adjustments, and taxes (Note 4)................. -- -- -- 46.2 46.2 Minimum pension liability adjustment............................... -- -- -- (3.8) (3.8) ---- -------- ------- ------ -------- Other comprehensive income.......................................... -- -- -- 42.4 42.4 Comprehensive income.................................................. 268.7 ---- -------- ------- ------ -------- Balance, December 31, 2000............................................ 2.5 1,628.6 382.4 13.0 2,026.5 Dividends............................................................. -- -- (115.0) -- (115.0) Comprehensive income: Net loss............................................................ -- -- (34.0) -- (34.0) Other comprehensive income: Unrealized losses on investments net of unrealized gains, reclassification adjustments, and taxes (Note 4)................. -- -- -- 36.6 36.6 Minimum pension liability adjustment............................... -- -- -- (11.5) (11.5) ---- -------- ------- ------ -------- Other comprehensive income.......................................... -- -- -- 25.1 25.1 Comprehensive loss.................................................... (8.9) ---- -------- ------- ------ -------- Balance, December 31, 2001............................................ 2.5 1,628.6 233.4 38.1 1,902.6 Dividends............................................................. -- -- (90.0) -- (90.0) Capital Contribution.................................................. -- 125.0 -- -- 125.0 Comprehensive income: Net loss............................................................ -- -- (5.6) -- (5.6) Other comprehensive income: Unrealized losses on investments net of unrealized gains, reclassification adjustments, and taxes (Note 4)................. -- -- -- 43.8 43.8 Minimum pension liability adjustment............................... -- -- -- (1.9) (1.9) ---- -------- ------- ------ -------- Other comprehensive income.......................................... -- -- -- 41.9 41.9 Comprehensive income.................................................. -- -- -- -- 36.3 ---- -------- ------- ------ -------- Balance, December 31, 2002............................................ $2.5 $1,753.6 $ 137.8 $ 80.0 $1,973.9 ==== ======== ======= ====== ========
See accompanying notes to consolidated financial statements. F-148 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2002, 2001, and 2000
2002 2001 2000 --------- --------- --------- ($ in millions) Cash flows from operating activities (Note 3): Net (loss) income....................................................................... $ (5.6) $ (34.0) $ 226.3 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Interest credited to policyholders' account balances................................... 103.1 92.0 99.9 Universal life and investment-type product policy fee income........................... (112.4) (117.8) (127.4) Capitalization of deferred policy acquisition costs.................................... (213.1) (194.5) (175.0) Amortization of deferred policy acquisition costs...................................... 156.1 158.8 139.1 Provision for depreciation and amortization............................................ 36.5 64.9 32.9 Provision for deferred federal income taxes............................................ 31.6 (6.4) 63.4 Net realized losses (gains) on investments............................................. 151.1 12.3 (37.5) Non-cash distributions from investments................................................ (14.9) 52.9 (226.7) Change in other assets and accounts payable and other liabilities...................... (142.2) (55.1) (69.7) Change in future policy benefits....................................................... 79.9 75.5 58.7 Change in other policyholders' liabilities............................................. 8.1 (14.8) 10.6 Change in current federal income taxes payable......................................... (3.0) (12.2) (41.0) Loss on discontinued real estate operations............................................ 3.9 -- -- Extraordinary loss on extinguishment of debt........................................... -- -- 56.8 --------- --------- --------- Net cash provided by operating activities.............................................. 79.1 21.6 10.4 ========= ========= ========= Cash flows from investing activities: Sales, maturities or repayments of: Fixed maturity securities.............................................................. 1,161.3 1,275.7 1,067.5 Equity securities...................................................................... 11.1 39.9 514.2 Mortgage loans on real estate.......................................................... 423.2 341.6 453.7 Policy loans, net...................................................................... 16.4 35.7 3.6 Other invested assets.................................................................. 39.3 57.9 179.6 Acquisitions of investments: Fixed maturity securities.............................................................. (1,722.7) (1,398.0) (1,058.9) Equity securities...................................................................... (28.5) (51.4) (127.6) Mortgage loans on real estate.......................................................... (503.4) (405.3) (442.4) Property and equipment, net............................................................ (25.5) (41.2) (54.8) Other invested assets.................................................................. (18.5) (127.5) (99.6) Other, net............................................................................. -- -- (150.0) --------- --------- --------- Net cash (used in)/provided by investing activities..................................... (647.3) (272.6) 285.3 ========= ========= =========
See accompanying notes to consolidated financial statements. F-149 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) Years Ended December 31, 2002, 2001, and 2000
2002 2001 2000 -------- -------- --------- ($ in millions) Cash flows from financing activities: Issuance of debt................................................. -- -- 215.0 Repayments of debt............................................... -- (0.1) (301.3) Proceeds of demand note payable to affiliate..................... 121.0 -- -- Repayment of demand note payable to affiliate.................... (121.0) -- -- Receipts from annuity and universal life policies credited to policyholders' account balances................................ 1,179.2 1,150.9 2,287.1 Return of policyholders' account balances on annuity policies and universal life policies.................................... (727.3) (979.3) (2,305.9) Capital contribution............................................. 125.0 -- 65.0 Dividends paid to shareholder.................................... (90.0) (115.0) (100.0) -------- -------- --------- Net cash provided by/(used in) financing activities.............. 486.9 56.5 (140.1) -------- -------- --------- Net (decrease)/increase in cash and cash equivalents............. (81.3) (194.5) 155.6 Cash and cash equivalents, beginning of year..................... 305.0 499.5 343.9 -------- -------- --------- Cash and cash equivalents, end of year........................... $ 223.7 $ 305.0 $ 499.5 ======== ======== ========= Supplemental disclosure of cash flow information: Cash (received)/paid during the period for: Income taxes................................................... $ (27.5) $ 5.9 $ 93.3 Interest....................................................... $ 19.4 $ 19.8 $ 29.4
See accompanying notes to consolidated financial statements. F-150 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Description of Business: The MONY Life Insurance Company ("MONY Life") and its subsidiaries (MONY Life and its subsidiaries are collectively referred to herein as the "Company"), provide life insurance, annuities, corporate-owned and bank-owned life insurance ("COLI and BOLI"), mutual funds, securities brokerage, securities trading, business and estate planning and trust services. The Company distributes its products and services through Retail and Wholesale distribution channels. The Company's Retail distribution channels are comprised of (i) the career agency sales force operated by MONY Life, and (ii) financial advisors and account executives of the Company's securities broker dealer subsidiary. The Company's Wholesale distribution channel is comprised of (i) MONY Partners, a division of MONY Life, (ii) independent third party insurance brokerage general agencies and securities broker dealers and (iii) its corporate marketing team which markets COLI and BOLI products. For the year ended December 31, 2002, Retail distribution accounted for approximately 22.8% and 43.5% of sales of protection and accumulation products, respectively, while Wholesale distribution accounted for 77.2% and 56.5% of sales of protection and accumulation products, respectively. The Company principally sells its products in all 50 of the United States, the District of Columbia, the U.S. Virgin Islands, Guam and the Commonwealth of Puerto Rico, and currently insures or provides other financial services to more than one million individuals. MONY Life's principal wholly owned direct and indirect operating subsidiaries include: (i) MONY Life Insurance Company of America ("MLOA"), an Arizona domiciled life insurance company, (ii) Enterprise Capital Management ("Enterprise"), a distributor of both proprietary and non-proprietary mutual funds, (iii) U.S. Financial Life Insurance Company ("USFL"), an Ohio domiciled insurer underwriting specialty risk life insurance business, (iv) MONY Securities Corporation ("MSC"), a registered securities broker-dealer and investment advisor whose products and services are distributed through MONY Life's career agency sales force, (v) Trusted Securities Advisors Corp. ("Trusted Advisors"), which distributes investment products and services through a network of accounting professionals, (vi) MONY Brokerage, Inc. ("MBI"), a licensed insurance broker, which principally provides MONY Life's career agency sales force with access to life, annuity, small group health, and specialty insurance products written by other insurance companies so they can meet the insurance and investment needs of their customers, and (vii) MONY International Holdings ("MIH"), which through its Brazilian domiciled insurance brokerage subsidiary, principally provides insurance brokerage services to unaffiliated third party insurance companies in Brazil and, to a lesser extent since its reorganization in 2001, provides life insurance, annuity and investment products, as well as trust services, to nationals of certain Latin American countries through its Cayman Island based insurance and banking subsidiaries (MONY Life Insurance Company of the Americas, Ltd. and MONY Bank and Trust Company of the Americas, Ltd., respectively). On February 27, 2002, The MONY Group Inc. ("MONY Group"), MONY Life's ultimate parent, formed MONY Holdings, LLC ("MONY Holdings") as a downstream, wholly-owned holding company of the MONY Group. MONY Group formed MONY Holdings for the purpose of issuing debt tied to the performance of the Closed Block Business within MONY Life (see Note 19). On April 30, 2002, the date MONY Holdings commenced its operations, MONY Holdings, through a structured financing tied to the performance of the Closed Block Business within MONY Life, issued $300.0 million of floating rate insured debt securities (the "Insured Notes") in a private placement and MONY Group, pursuant to the terms of the structured financing, transferred all of its ownership interest in MONY Life to MONY Holdings. Other than activities related to servicing the Insured Notes in accordance with the Insured Notes indenture and its ownership interest in MONY Life, MONY Holdings has no operations and engages in no other activities. Proceeds to MONY Holdings from the issuance of the Insured Notes, after all offering and other related expenses, were approximately $292.6 million. Of this amount, $60.0 million was deposited in a debt service coverage account (the "DSCA"), pursuant to the terms of the note indenture, to provide collateral for the payment of interest and principal on the Insured Notes and the balance of approximately $232.6 million was distributed to MONY Group in the form of a dividend. The Insured Notes mature on January 21, 2017. The Insured Notes pay interest only through January 21, 2008 at which time principal payments will begin to be made pursuant to an amortization schedule. Interest on the Insured Notes is payable quarterly at an annual rate equal to three month LIBOR plus 0.55%. Concurrent with the issuance of the Insured Notes, MONY Holdings entered into an interest rate swap contract (the "Swap"), which locked in a fixed rate of interest on the Insured Notes at 6.44%. Including debt issuance costs of $7.4 F-151 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 1. Organization and Description of Business: (continued) million and the cost of the insurance policy (75 basis points per annum) (the "Insurance Policy"), which guarantees the scheduled principal and interest payments on the Insured Notes, the all-in cost of the indebtedness is 7.36%. See Note 20 for further information regarding the Insured Notes. 2. The Closed Block: On November 16, 1998, the Company, pursuant to the New York Insurance Law, established a closed block (the "Closed Block") of certain participating insurance policies (the "Closed Block in force business") as defined in its plan of demutualization (the "Plan"). In conjunction therewith, the Company allocated assets to the Closed Block that are expected to produce cash flows which, together with anticipated revenues from the Closed Block in force business, are expected to be sufficient to support the Closed Block in force business, including but not limited to the payment of claims and surrender benefits, certain expenses and taxes, and for the continuation of dividend scales in effect at the date of the Company's demutualization (assuming the experience underlying such dividend scales continues), and for appropriate adjustments in such scales if the experience changes. To determine the amount of assets to allocate to the Closed Block in order to provide sufficient funding for the aforementioned payments, the Company forecasted the expected cash flows from the Closed Block in force business and mathematically determined the cash flows that would need to be provided from assets allocated to the Closed Block to fully fund the aforementioned payments. Assets were then allocated to the Closed Block accordingly. The aforementioned forecast consists of a cash flow projection for each year over the estimated life of the policies in the Closed Block. The earnings from such expected cash flows from the Closed Block in force business and the assets allocated to the Closed Block are referred to as the "glide path earnings". All the cash flows from the assets allocated to the Closed Block and the Closed Block in force business inure solely to the benefit of the owners of policies included in the Closed Block. The assets and liabilities allocated to the Closed Block at the date of its formation (November 16, 1998, which was the effective date of the Company's demutualization) were recorded in the Company's financial statements at their historical carrying values. The carrying value of the assets allocated to the Closed Block is less than the carrying value of the Closed Block liabilities at the effective date of the Company's demutualization. The excess of the Closed Block liabilities over the Closed Block assets at the effective date of the Company's demutualization represents the total estimated future post-tax contribution expected to emerge from the operation of the Closed Block, which will be recognized in the Company's income over the period the policies and the contracts in the Closed Block remain in force. To the extent that the actual cash flows, subsequent to the effective date of the Company's demutualization, from the assets allocated to the Closed Block and the Closed Block in force business are, in the aggregate, more favorable than assumed in establishing the Closed Block, total dividends paid to the Closed Block policyholders in future years will be greater than the total dividends that would have been paid to such policyholders if dividend scales used to determine Closed Block cash flows had been continued. Conversely, to the extent that the actual cash flows, subsequent to the effective date of the Company's demutualization, from the assets allocated to the Closed Block and the Closed Block in force business are, in the aggregate, less favorable than assumed in establishing the Closed Block, total dividends paid to the Closed Block policyholders in future years will be less than the total dividends that would have been paid to such policyholders if dividend scales used to determine Closed Block cash flows had been continued. Accordingly, the recognition of the estimated ultimate aggregate future post-tax contribution expected to emerge from the operation of the Closed Block is not affected by the ultimate aggregate actual experience of the Closed Block assets and the Closed Block in force business subsequent to the effective date of the Company's demutualization, except in the event that the actual experience of the Closed Block assets and the Closed Block in force business subsequent to the effective date of the Company's demutualization is not sufficient to pay the guaranteed benefits on the policies in the Closed Block, in which case the Company will be required to fund any such deficiency from its general account assets outside of the Closed Block. However, because the decision to increase or decrease dividend scales is based on revised estimates as to the ultimate profitability of the Closed Block such actions will not necessarily coincide with periodic reports of the results of the Closed Block. Accordingly, actual earnings that emerge from the Closed Block may either be more or less than the expected Closed Block earnings (or "glide path earnings"). In accordance with American Institute of Certified Public Accountants ("AICPA") Statement F-152 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 2. The Closed Block: (continued) of Position 00-3 "Accounting by Insurance Enterprises for Demutualizations and Formations of Mutual Insurance Holding Companies and for Certain Long-Duration Participating Contracts", actual Closed Block earnings in excess of expected Closed Block earnings (or the "glide path earnings") in any period are recorded as an additional liability to Closed Block policyholders (referred to as the "deferred dividend liability") because such excess earnings inure solely to the benefit of the policyholders in the Closed Block. If actual Closed Block earnings are less than expected Closed Block earnings (or the "glide path earnings") in any period the difference is charged against the balance of any existing deferred dividend liability. If the deferred dividend liability is not sufficient to absorb the difference, any such remaining amount, not absorbed, will remain in earnings for the period and an adjustment will be made to get back on the glide path when earnings emerge in future periods that are sufficient to offset such remaining accumulated difference or through a subsequent reduction in dividend scales. As of December 31, 2002 and 2001, the deferred dividend liability was $33.2 million and $47.8 million, respectively. Since the Closed Block has been funded to provide for payment of guaranteed benefits and the continuation of current payable dividends on the policies included therein, it will not be necessary to use general funds to pay guaranteed benefits unless the in force business in the Closed Block experiences very substantial ongoing adverse experience in investment, mortality, persistency or other experience factors. The Company regularly (at least quarterly) monitors the experience from the Closed Block and may make changes to the dividend scale, when appropriate, to ensure that the profits are distributed to the Closed Block policyholders in a fair and equitable manner. In addition, annually the New York Insurance Department requires the filing of an independent auditor's report on the operations of the Closed Block. 3. Summary of Significant Accounting Policies: Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in conformity with GAAP 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 significantly from those estimates. The most significant estimates made in conjunction with the preparation of the Company's financial statements include those used in determining (i) deferred policy acquisition costs, (ii) the liability for future policy benefits, (iii) valuation allowances for mortgage loans and charges for the impairment of invested assets, (iv) pension costs, (v) costs associated with contingencies, (vi) litigation and restructuring charges and (vii) income taxes. Certain reclassifications have been made in the amounts presented for prior years to conform those years to the current year's presentation. Principles of Consolidation The accompanying consolidated financial statements include the accounts of MONY Life and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Valuation of Investments and Realized Gains and Losses The Company's fixed maturity securities are classified as available-for-sale and are reported at estimated fair value. The Company's equity securities are comprised of investments in common stocks and venture capital limited partnerships. The Company's investments in common stocks are classified as available-for-sale and are reported at estimated fair value. The Company's investments in venture capital limited partnerships are accounted for in accordance with the equity method of accounting or at estimated fair value (with changes in fair value recorded in other comprehensive income) depending upon the Company's percentage ownership of the partnership and the date it was acquired. In general, partnership interests acquired after May 18, 1995 are accounted for in accordance with the equity method of accounting if the Company's ownership interest in the F-153 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. Summary of Significant Accounting Policies: (continued) partnership exceeds 3 percent, whereas, if the partnership was acquired prior to May 18, 1995, the equity method would be applied only if the Company's ownership interest is 20 percent or greater. In the unlikely event that the Company's ownership interest in a partnership exceeded 50 percent the partnership would be consolidated. In all other circumstances, the Company accounts for its investments in venture capital limited partnerships at estimated fair value. Because the underlying partnerships are required under GAAP to mark their investment portfolios to market and report changes in such market value through their earnings, the Company's earnings will reflect its pro rata share of such mark to market adjustment if it accounts for the partnership investment under the equity method. With respect to partnerships accounted for at fair value, there will be no impact on the Company's earnings until: (i) the underlying investments held by the partnership are distributed to the Company, or (ii) the underlying investments held by the partnership are sold by the partnership and the proceeds distributed to the Company, or (iii) an impairment of the Company's investment in the partnership is determined to exist. Unrealized gains and losses on fixed maturity securities and common stocks are reported as a separate component of other comprehensive income, net of deferred income taxes and an adjustment for the effect on deferred policy acquisition costs that would have occurred if such gains and losses had been realized. The cost of all fixed maturity securities and common stock is adjusted for impairments in value deemed to be other than temporary. Fixed maturity securities deemed to be other than temporarily impaired are analyzed to assess whether such investments should be placed on non-accrual status. A fixed maturity security would be placed on non-accrual status when management believes it will not receive all principal and interest payments according to the original terms. Any cash received on non-accrual status securities is applied against the outstanding principal. These adjustments are reflected as realized losses on investments. Realized gains and losses on sales of investments are determined on the basis of specific identification. Mortgage loans on real estate are stated at their unpaid principal balances, net of valuation allowances. Valuation allowances are established for the excess of the carrying value of a mortgage loan over its estimated fair value when the loan is considered to be impaired. Mortgage loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Estimated fair value is based on either the present value of expected future cash flows discounted at the loan's original effective interest rate, or the loan's observable market price (if considered to be a practical expedient), or the fair value of the collateral if the loan is collateral dependent and if foreclosure of the loan is considered probable. The provision for loss is reported as a realized loss on investment. Loans in foreclosure and loans considered to be impaired, other than restructured loans, are placed on non-accrual status. Interest received on non-accrual status mortgage loans is included in investment income in the period received. Interest income on restructured mortgage loans is accrued at the restructured loans' respective interest rates. Real estate held for investment, as well as related improvements, is generally stated at cost less depreciation. Depreciation is determined using the straight-line method over the estimated useful life of the asset, which may range from 5 to 40 years. Cost is adjusted for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Impairment losses are based on the estimated fair value of the real estate, which is generally computed using the present value of expected future cash flows from the real estate discounted at a rate commensurate with the underlying risks. Impairment losses on real estate held for investment are reported as realized losses on investments. Real estate investments meeting the following criteria are classified as "real estate to be disposed of" in the Company's consolidated statement of financial position and the results therefrom are reported as "discontinued operations" in the Company's consolidated statement of income and comprehensive income as a result of the Company's adoption in 2002 of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"): . Management, having the authority to approve the action, commits the organization to a plan to sell the property; . The property is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; . An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated and are continuing; F-154 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. Summary of Significant Accounting Policies: (continued) . The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; . The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and . Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Real estate to be disposed of is carried at the lower of its carrying value at the time of classification as "to be disposed of" or fair value less estimated selling costs. Policy loans are carried at their unpaid principal balances. Cash and cash equivalents include cash on hand, amounts due from banks and highly liquid debt instruments with an original maturity of three months or less. Collateralized Financing Transactions Securities loaned and borrowed are accounted for as collateralized financing transactions and are recorded at the amount of cash collateral received or advanced. The fee received or paid by the Company is recorded as interest revenue or expense and is reflected in other income and other operating costs and expenses, respectively, in the consolidated statement of income and comprehensive income. The initial collateral advanced or received has a higher market value than the underlying securities. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded, as necessary. The Company utilizes short-term repurchase agreements as supplementary short-term financing and delivers U.S. Treasury securities as collateral for cash received. These repurchase agreements are accounted for as collateralized financings. The fee paid by the Company is recorded as interest. The Company monitors the market value of securities transferred on a daily basis, and provides additional collateral as necessary. Recognition of Insurance Revenue and Related Benefits Premiums from participating and non-participating traditional life, health and annuity policies with life contingencies are recognized as premium income when due. Benefits and expenses are matched with such income so as to result in the recognition of profits over the life of the contracts. This match is accomplished by means of the provision for liabilities for future policy benefits and the deferral and subsequent amortization of policy acquisition costs. Premiums from universal life and investment-type contracts are reported as deposits to policyholders' account balances. Revenue from these types of products consists of amounts assessed during the period against policyholders' account balances for policy administration charges, cost of insurance and surrender charges, and mortality and expense charges on variable contracts. Policy benefits charged to expense include benefit claims incurred in the period in excess of the related policyholders' account balance. Commissions The Company earns commissions from clients for execution of securities, mutual funds, and insurance transactions. Commission revenues and related expenses are recorded on a trade-date basis and are reflected in other income and other operating costs and expenses, respectively, in the consolidated statement of income and comprehensive income. F-155 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. Summary of Significant Accounting Policies: (continued) Deferred Policy Acquisition Costs ("DPAC") The costs of acquiring new business, principally commissions, underwriting, agency, and policy issue expenses, all of which vary with and are primarily related to the production of new business, are deferred. For participating traditional life policies, DPAC is amortized over the expected life of the contracts (30 years) as a constant percentage based on the present value of estimated gross margins expected to be realized over the life of the contracts using the expected investment yield. At December 31, 2002, the expected investment yield for the Closed Block was 7.26% for 2003 with subsequent years grading down to an ultimate aggregate yield of 7.13% in 2013. Estimated gross margins include anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve and expected annual policyholder dividends. For universal life products and investment-type products, DPAC is amortized over the expected life of the contracts (ranging from 15 to 30 years) as a constant percentage based on the present value of estimated gross profits expected to be realized over the life of the contracts using the initial locked in discount rate. For non-participating term policies, DPAC is amortized over the expected life of the contracts (ranging from 10 to 20 years) in proportion to premium revenue recognized. The discount rate for all products is 8.0%. Estimated gross profits arise principally from investment results, mortality and expense margins and surrender charges. The Company conducts programs from time-to-time that allow annuity contractholders to exchange older annuity contracts for new annuity products sold at no cost. The Company has determined that the old and new products are substantially similar and, as such, the Company retains previously recorded DPAC related to the exchanged contract. DPAC is subject to recoverability testing at the time of policy issuance and loss recognition testing at the end of each accounting period. The effect on the amortization of DPAC of revisions in estimated experience is reflected in earnings in the period such estimates are revised. In addition, the effect on the DPAC asset that would result from the realization of unrealized gains (losses) is recognized through an offset to other comprehensive income as of the balance sheet date. Future Policy Benefits and Policyholders' Account Balances Future policy benefit liabilities for participating traditional life policies are calculated using a net level premium method on the basis of actuarial assumptions equal to guaranteed mortality and dividend fund interest rates. The liability for annual dividends represents the accrual of annual dividends earned. Dividend fund interest assumptions range from 2.0% to 5.5%. Policyholders' account balances for universal life and investment-type contracts represent an accumulation of gross premium payments plus credited interest less expense and mortality charges and withdrawals. The weighted average interest crediting rate for universal life products was approximately 5.6%, 5.9% and 5.9% for the years ended December 31, 2002, 2001, and 2000, respectively. The weighted average interest crediting rate for investment-type products was approximately 4.3%, 4.5% and 4.9% for the years ended December 31, 2002, 2001, and 2000, respectively. Dividends to Policyholders Dividends to policyholders reflected on the consolidated statement of income and comprehensive income is comprised of policyholder dividends payable in the current year and the change in the deferred dividend liability. Dividends payable to policyholders are determined annually by the board of directors of the Company. All but a deminimus amount of dividends paid to policyholders are on policies in the Closed Block. Refer to Note 2 for a more detailed explanation of policyholder dividends, as well as the deferred dividend liability. The change on the deferred dividend liability recognized in the consolidated statement of income and comprehensive income was $(14.6) million, $21.2 million, and $2.5 million for the years ended December 31, 2002, 2001, and 2000, respectively. F-156 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. Summary of Significant Accounting Policies: (continued) Participating Business At December 31, 2002 and 2001, participating business, substantially all of which is in the Closed Block, represented approximately 34.0% and 39.4% of the Company's life insurance in force, and 73.7% and 76.8% of the number of life insurance policies in force, respectively. For each of the years ended December 31, 2002, 2001, and 2000, participating business represented approximately 82.5%, 83.5%, and 91.6%, respectively, of life insurance premiums. Federal Income Taxes The Company files a consolidated federal income tax return with its ultimate parent, the MONY Group and its other subsidiaries, as well as the Company's life and non-life affiliates except Sagamore Financial Corporation, the parent holding company of USFL. Deferred income tax assets and liabilities are recognized based on the difference between financial statement carrying amounts and income tax bases of assets and liabilities using enacted income tax rates and laws. Reinsurance The Company has reinsured certain of its life insurance and investment contracts with other insurance companies under various agreements. Amounts due from reinsurers are estimated based on assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Policy and contract liabilities are reported gross of reinsurance reserve credits. Gains on reinsurance are deferred and amortized into income over the remaining life of the underlying reinsured contracts. In determining whether a reinsurance contract qualifies for reinsurance accounting, Statement of Financial Accounting Standards ("SFAS") No. 113 "Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts" requires that there be a "reasonable possibility" that the reinsurer may realize a "significant loss" from assuming insurance risk under the contract. In making this assessment, the Company projects the results of the policies reinsured under the contract under various scenarios and assesses the probability of such results actually occurring. The projected results represent the present value of all the cash flows under the reinsurance contract. The Company generally defines a "reasonable possibility" as having a probability of at least 10%. In assessing whether the projected results of the reinsured business constitute a "significant loss", the Company considers: (i) the ratio of the aggregate projected loss, discounted at an appropriate rate of interest (the "aggregate projected loss"), to an estimate of the reinsurer's investment in the contract, as hereafter defined, and (ii) the ratio of the aggregate projected loss to an estimate of the total premiums to be received by the reinsurer under the contract discounted at an appropriate rate of interest. The reinsurer's investment in a reinsurance contract consists of amounts paid to the ceding company at the inception of the contract (e.g. expense allowances and the excess of liabilities assumed by the reinsurer over the assets transferred to the reinsurer under the contract) plus the amount of capital required to support such business consistent with prudent business practices, regulatory requirements, and the reinsurer's credit rating. The Company estimates the capital required to support such business based on what it considers to be an appropriate level of risk-based capital in light of regulatory requirements and prudent business practices. Separate Accounts Separate accounts are established in conformity with insurance laws and are generally not chargeable with liabilities that arise from any other business of the Company. Separate account assets are subject to general account claims only to the extent that the value of such assets exceeds the separate account liabilities. Investments held in separate accounts and liabilities of the separate accounts are reported separately as assets and liabilities. Substantially all separate account assets are reported at estimated fair value. Investment income and gains or losses on the investments of separate accounts accrue directly to contractholders and, accordingly, are not reflected in the Company's consolidated statements of income and comprehensive income and cash flows. Fees charged to the separate accounts by the Company (including mortality charges, policy administration fees and surrender charges) are reflected in the Company's revenues. F-157 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. Summary of Significant Accounting Policies: (continued) Consolidated Statements of Cash Flows -- Non-cash Transactions For the years ended December 31, 2002, 2001, and 2000, respectively, real estate of $12.0 million, $18.0 million, and $0.5 million was acquired in satisfaction of debt. At December 31, 2002 and 2001, the Company owned real estate acquired in satisfaction of debt of $33.1 million and $44.3 million, respectively. Other non-cash transactions, which are reflected in the statement of cash flows as a reconciling item from net income to net cash provided by operating activities, consisted primarily of stock distributions from the Company's partnership investments and payment-in-kind for interest due on certain fixed maturity securities. Recent Accounting Pronouncements Adopted as of December 31, 2002 On January 1, 2001 the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires all derivatives to be recognized in the statement of financial position as either assets or liabilities and measured at fair value. The corresponding derivative gains and losses should be reported based on the hedge relationship that exists, if there is one. Changes in the fair value of derivatives that are not designated as hedges or that do not meet the hedge accounting criteria in SFAS 133, are required to be reported in earnings. The Company's use of derivative instruments is not significant and accordingly, adoption of the standard did not have a material effect on the Company's earnings or financial position. On January 1, 2001 the Company adopted SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", a replacement of SFAS No. 125" ("SFAS 140"). SFAS No. 140 specifies the accounting and reporting requirements for securitizations and other transfers of financial assets and collateral, recognition and measurement of servicing assets and liabilities, and the extinguishment of liabilities. Adoption of the new requirements did not have a material effect on the Company's earnings or financial position. In July 2001, the FASB issued SFAS No. 141, Business Combinations ("SFAS 141"). SFAS 141 addresses the financial accounting and reporting for all business combinations. This statement requires that all business combinations be accounted for under the purchase method of accounting, abolishes the use of the pooling-of-interest method, requires separate recognition of intangible assets that can be identified and named, and expands required disclosures. All of the Company's past business combinations have been accounted for under the purchase accounting method. The provisions of this statement apply to all business combinations initiated after June 30, 2001. The adoption of SFAS 141 had no material effect on the Company's earnings or financial position. In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142 provides that goodwill and intangible assets that have indefinite useful lives will not be amortized but rather will be tested at least annually for impairment. This Statement provides specific guidance for testing the impairment of goodwill and intangible assets. This statement was effective for fiscal years beginning after December 15, 2001. As a result of adopting this statement, the Company no longer recognizes goodwill amortization of approximately $1.3 million on an annualized basis. In addition, since the adoption of this standard, based on the Company's estimate of its reporting units, the Company has determined that none of its goodwill is impaired. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). This statement establishes a single accounting model for the impairment or disposal of long-lived assets, including assets to be held and used, assets to be disposed of by other than sale, and assets to be disposed of by sale. The provisions of SFAS 144 are effective for the financial statements issued for fiscal years beginning after December 15, 2001 and interim periods within such year, except that assets held for sale as a result of disposal activities initiated prior to the effective date of SFAS 144 may be accounted for in accordance with prior guidance until the end of the fiscal year in which SFAS 144 is effective. SFAS 144 retains many of the same provisions as SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be F-158 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 3. Summary of Significant Accounting Policies: (continued) Disposed of" ("SFAS 121"). In addition to retaining the SFAS 121 requirements, SFAS 144 requires companies to present the results of operations of components of the entity that are held for sale as discontinued operations in the consolidated statement of income and comprehensive income. The Company had real estate that meets the definition of a component of the entity. Substantially all of the Company's real estate to be disposed of resulted from disposal activities initiated prior to the effective date of SFAS 144. The carrying value of real estate to be disposed of at December 31, 2002 was $26.8 million. The Company's pretax loss from real estate to be disposed of for the year ended December 31, 2002, which is reported in the Company's consolidated statement of income and comprehensive income as a discontinued operation, was $3.9 million. Recent Accounting Pronouncements Not Yet Adopted as of December 31, 2002 In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("Interpretation 46"), which represents an interpretation of Accounting Research Bulletin No. 51 ("ARB 51"), "Consolidated Financial Statements". ARB 51 requires that a Company's consolidated financial statements include subsidiaries in which the Company has a controlling financial interest. That requirement usually has been applied to subsidiaries in which the Company has a majority voting interest. However, the voting interest approach is not effective in identifying controlling financial interests in entities (referred to as "variable interest entities") that are not controllable through voting interests or in which the equity investors do not bear the residual economic risks. Interpretation 46 provides guidance on identifying variable interest entities and on assessing whether a Company's investment in a variable interest entity requires consolidation thereof. Interpretation 46 is effective immediately for investments made in variable interest entities after January 31, 2003 and it is effective in the first fiscal year or interim period beginning after June 15, 2003 for investments in variable interest entities made prior to February 1, 2003. The adoption of Interpretation 46 is not expected to have a material impact on the Company's earnings or financial position. 4. Investment Income, Realized and Unrealized Investment Gains (Losses), and Comprehensive Income: Net investment income for the years ended December 31, 2002, 2001, and 2000 was derived from the following sources:
2002 2001 2000 ------ ------ -------- ($ in millions) Net Investment Income Fixed maturity securities.............................. $486.7 $484.4 $ 495.4 Equity securities...................................... 7.8 (33.9) 239.4 Mortgage loans......................................... 138.9 139.8 144.3 Other investments (including cash and short-term)...... 126.3 132.7 136.9 ------ ------ -------- Total investment income................................ 759.7 723.0 1,016.0 Investment expenses.................................... 34.3 46.1 45.1 ------ ------ -------- Net investment income.................................. $725.4 $676.9 $ 970.9 ====== ====== ========
Net realized gains (losses) on investments for the years ended December 31, 2002, 2001, and 2000 are summarized as follows:
2002 2001 2000 ------- ------ ------ ($ in millions) Net Realized Gains (Losses) on Investments Fixed maturity securities.............................. $ (79.5) $ (2.6) $(30.1) Equity securities...................................... (38.7) (7.8) 21.5 Mortgage loans......................................... (3.0) 9.3 19.8 Other invested assets.................................. (29.9) (11.2) 26.3 ------- ------ ------ Net realized gains (losses) on investments............. $(151.1) $(12.3) $ 37.5 ======= ====== ======
F-159 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 4. Investment Income, Realized and Unrealized Investment Gains (Losses), and Comprehensive Income: (continued) Following is a summary of the change in unrealized investment gains (losses), net of related deferred income taxes and the adjustment for deferred policy acquisition costs (see Note 8), which are reflected in Accumulated Other Comprehensive Income for the periods presented. The net change in unrealized investment gains (losses) and the change in the Company's minimum pension liability represent the only components of other comprehensive income for the years ended December 31, 2002, 2001, and 2000 as presented below:
2002 2001 2000 ------- ------ ------ ($ in millions) Other Comprehensive Income Change in unrealized gains (losses): Fixed maturity securities.............................. $ 360.5 $156.7 $196.7 Equity securities...................................... 2.2 (3.4) (59.9) ------- ------ ------ Subtotal............................................... 362.7 153.3 136.8 AEGON Portfolio (See Note 11).......................... (29.3) 31.0 20.6 ------- ------ ------ Subtotal............................................... 333.4 184.3 157.4 Effect on unrealized gains (losses) on investments attributable to: DPAC................................................. (67.4) (30.3) (93.1) Deferred federal income taxes........................ (92.4) (48.2) (20.6) Net unrealized gains (losses) and DPAC transferred to the Closed Block..................................... (129.8) (69.2) 2.5 ------- ------ ------ Change in unrealized gains (losses) on investments, net 43.8 36.6 46.2 Minimum pension liability adjustment................... (1.9) (11.5) (3.8) ------- ------ ------ Other comprehensive income............................. $ 41.9 $ 25.1 $ 42.4 ======= ====== ======
The following table sets forth the reclassification adjustments required for the years ended December 31, 2002, 2001, and 2000 to avoid double-counting in comprehensive income items that are included as part of net income for a period that also had been part of other comprehensive income in earlier periods:
2002 2001 2000 ------ ----- ----- ($ in millions) Reclassification Adjustments Unrealized gains (losses) on investments................................... $ 83.7 $34.6 $48.6 Reclassification adjustment for gains included in net income............... (41.8) (9.5) (6.2) ------ ----- ----- Unrealized gains (losses) on investments, net of reclassification adjustments.............................................................. $ 41.9 $25.1 $42.4 ====== ===== =====
Unrealized gains (losses) on investments, (excluding net unrealized gains (losses) on assets allocated to the Closed Block), reported in the above table for the years ended December 31, 2002, 2001, and 2000 are net of income tax expense (benefit) of $115.0 million, $43.2 million and $17.2 million, respectively, and $(71.4) million, $(32.1) million and $(95.5) million, respectively, relating to the effect of such unrealized gains (losses) on DPAC. Reclassification adjustments, (excluding net unrealized gains (losses) on assets allocated to the Closed Block), reported in the above table for the years ended December 31, 2002, 2001, and 2000 are net of income tax expense (benefit) of $(22.5) million, $5.1 million and $3.3 million, respectively, and $4.1 million, $1.8 million and $2.5 million, respectively, relating to the effect of such amounts on DPAC. F-160 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. Fixed Maturity and Equity Securities: Fixed Maturity Securities Available-for-Sale The amortized cost, gross unrealized gains and losses, and estimated fair value of fixed maturity securities available-for-sale as of December 31, 2002 and 2001 are as follows:
Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value ----------------- ------------- ----------- ----------------- 2002 2001 2002 2001 2002 2001 2002 2001 -------- -------- ------ ------ ----- ----- -------- -------- ($ in millions) U.S. Treasury securities and Obligations of U.S. Government agencies................. $ 847.2 $ 292.7 $ 66.7 $ 14.7 $ 0.2 $ 0.2 $ 913.7 $ 307.2 Collateralized mortgage obligations: Government agency-backed.................. 169.3 268.4 8.4 5.8 -- 0.8 177.7 273.4 Non-agency backed......................... 92.8 166.3 3.4 7.0 -- 0.0 96.2 173.3 Other asset-backed securities: Government agency-backed.................. 121.9 18.4 5.9 0.7 -- 0.0 127.8 19.1 Non-agency backed......................... 582.1 611.5 34.7 17.9 4.6 9.6 612.2 619.8 Foreign governments........................ 42.5 32.1 6.1 4.0 0.3 0.7 48.3 35.4 Utilities.................................. 546.1 551.3 37.1 16.9 7.2 4.6 576.0 563.6 Corporate bonds............................ 4,871.4 4,830.3 385.1 153.0 30.7 58.3 5,225.8 4,925.0 -------- -------- ------ ------ ----- ----- -------- -------- Total bonds............................... 7,273.3 6,771.0 547.4 220.0 43.0 74.2 7,777.7 6,916.8 Redeemable preferred stocks................ 47.0 55.6 3.5 1.2 -- 0.1 50.5 56.7 -------- -------- ------ ------ ----- ----- -------- -------- Total..................................... $7,320.3 $6,826.6 $550.9 $221.2 $43.0 $74.3 $7,828.2 $6,973.5 ======== ======== ====== ====== ===== ===== ======== ========
The carrying value of the Company's fixed maturity securities available-for-sale at December 31, 2002 and 2001 is net of adjustments for impairments in value deemed to be other than temporary of $124.4 million and $48.2 million, respectively. At December 31, 2002 and 2001, there was $6.7 million and $0.0 million, respectively, of fixed maturity securities which had been non-income producing for the twelve months preceding such dates. The Company classifies fixed maturity securities available-for-sale which: (i) are in default as to principal or interest payments; (ii) are to be restructured pursuant to commenced negotiations; (iii) went into bankruptcy subsequent to acquisition; or (iv) are deemed to have other than temporary impairments to value as "problem fixed maturity securities." At December 31, 2002 and 2001, the carrying value of problem fixed maturity securities held by the Company was $274.7 million and $66.7 million, respectively. The Company defines potential problem securities in the fixed maturity category as securities that are deemed to be experiencing significant operating problems or difficult industry conditions. At December 31, 2002 and 2001, the carrying value of potential problem fixed maturity securities held by the Company was $8.5 million and $16.1 million, respectively. In addition, at December 31, 2002 and 2001, the Company had no fixed maturity securities which had been restructured. F-161 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 5. Fixed Maturity and Equity Securities: (continued) The amortized cost and estimated fair value of fixed maturity securities available-for-sale, by contractual maturity dates (excluding scheduled sinking funds) as of December 31, 2002, are as follows:
Amortized Estimated Cost Fair Value --------- ---------- ($ in millions) Due in one year or less.......................................... $ 498.7 $ 507.5 Due after one year through five years............................ 2,024.1 2,165.3 Due after five years through ten years........................... 2,779.3 3,020.4 Due after ten years.............................................. 1,052.0 1,121.1 -------- -------- Subtotal.................................................. 6,354.1 6,814.3 Mortgage- and asset-backed securities............................ 966.2 1,013.9 -------- -------- Total..................................................... $7,320.3 $7,828.2 ======== ========
Fixed maturity securities available-for-sale that are not due at a single maturity date have been included in the preceding table in the year of final maturity. Actual maturity dates may differ from contractual maturity dates because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Proceeds from sales of fixed maturity securities available-for-sale during 2002, 2001, and 2000 were $468.1 million, $479.4 million and $441.3 million, respectively. Gross gains of $35.1 million, $21.3 million and $7.2 million and gross losses of $6.6 million, $8.3 million and $16.3 million were realized on these sales in 2002, 2001, and 2000, respectively. Equity Securities The cost, gross unrealized gains and losses, and estimated fair value of marketable and non-marketable equity securities at December 31, 2002 and 2001 are as follows:
Gross Gross Unrealized Unrealized Estimated Amortized Cost Gains Losses Fair Value ------------- ----------- ----------- ------------- 2002 2001 2002 2001 2002 2001 2002 2001 ------ ------ ----- ----- ----- ----- ------ ------ ($ in millions) Marketable equity securities.... $ 59.9 $ 67.3 $ 3.3 $ 6.2 $ 2.3 $ 6.9 $ 60.9 $ 66.6 Non-marketable equity securities 192.8 220.7 29.5 31.0 35.5 20.8 186.8 230.9 ------ ------ ----- ----- ----- ----- ------ ------ $252.7 $288.0 $32.8 $37.2 $37.8 $27.7 $247.7 $297.5 ====== ====== ===== ===== ===== ===== ====== ======
Proceeds from sales of equity securities during 2002, 2001, and 2000 were $16.5 million, $31.0 million and $499.2 million, respectively. Gross gains of $2.7 million, $3.1 million and $81.2 million and gross losses of $2.8 million, $9.5 million and $57.8 million were realized on these sales during 2002, 2001, and 2000, respectively. F-162 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 6. Mortgage Loans on Real Estate: Mortgage loans on real estate at December 31, 2002 and 2001 consist of the following:
2002 2001 -------- -------- ($ in millions) Commercial and residential mortgage loans.. $1,592.3 $1,533.6 Agricultural mortgage loans................ 307.8 304.6 -------- -------- Total loans................................ 1,900.1 1,838.2 Less: valuation allowances................. (22.7) (28.5) -------- -------- Mortgage loans, net of valuation allowances $1,877.4 $1,809.7 ======== ========
An analysis of the valuation allowances for 2002, 2001, and 2000 is as follows:
2002 2001 2000 ----- ----- ----- ($ in millions) Balance, beginning of year......................... $28.5 $32.2 $37.3 Increase/(decrease) in allowance................... 0.7 (0.8) (4.9) Reduction due to pay-downs, pay-offs, and writeoffs (2.1) (0.2) (0.2) Transfers to real estate........................... (4.4) (2.7) -- ----- ----- ----- Balance, end of year............................... $22.7 $28.5 $32.2 ===== ===== =====
Impaired mortgage loans along with related valuation allowances as of December 31, 2002 and 2001 are as follows:
2002 2001 ------ ------ ($ in millions) -------------- Investment in impaired mortgage loans (before valuation allowances): Loans that have valuation allowances................................ $ 66.7 $ 93.5 Loans that do not have valuation allowances......................... 90.3 85.2 ------ ------ Subtotal..................................................... 157.0 178.7 Valuation allowances................................................ (14.7) (18.4) ------ ------ Impaired mortgage loans, net of valuation allowances......... $142.3 $160.3 ====== ======
During 2002, 2001, and 2000, the Company recognized $11.3 million, $12.8 million and $19.5 million, respectively, of interest income on impaired loans. At December 31, 2002 and 2001, the carrying value of mortgage loans which were non-income producing for the twelve months preceding such dates was $13.8 million and $22.0 million, respectively. At December 31, 2002 and 2001, the Company had restructured mortgage loans of $29.8 million and $66.3 million, respectively. Interest income of $1.5 million, $4.3 million and $6.8 million was recognized on restructured mortgage loans in 2002, 2001, and 2000, respectively. Gross interest income on these loans that would have been recorded in accordance with the original terms of such loans amounted to approximately $4.0 million, $7.2 million and $9.5 million in 2002, 2001, and 2000, respectively. 7. Segment Information: The Company's business activities consist of the following: protection product operations, accumulation product operations, mutual fund operations, securities broker-dealer operations, insurance brokerage operations, and certain insurance lines of business no longer written by the Company (the "run-off businesses"). These business activities represent the Company's operating F-163 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 7. Segment Information: (continued) segments. Except as discussed below, these segments are managed separately because they either provide different products or services, are subject to different regulation, require different strategies, or have different technology requirements. Management considers the Company's mutual fund operations to be an integral part of the products offered by the Company's Accumulation Products segment. Accordingly, for management purposes (including performance assessment and making decisions regarding the allocation of resources), the Company aggregates its mutual fund operations with its Accumulation Products segment. Of the aforementioned segments, only the Protection Products segment and the Accumulation Products segment qualify as reportable segments in accordance with SFAS No.131 "Disclosures about Segments of an Enterprise and Related Information". All of the Company's other segments are combined and reported in the Other Products segment. Products comprising the Protection Products segment primarily include a wide range of individual life insurance products, including: whole life, term life, universal life, variable universal life, corporate-owned life, last survivor whole life, last survivor variable universal life, last survivor universal life, group universal life and special-risk products. In addition, included in the Protection Products segment are: (i) the assets and liabilities transferred pursuant to the Group Pension Transaction, as well as the Group Pension Profits derived therefrom (see Note 11), (ii) the Closed Block assets and liabilities, as well as the revenues and expenses relating thereto (See Notes 2 and 18), and (iii) the Company's disability income insurance products (which are 100% reinsured and no longer offered by the Company). The Accumulation Products segment primarily includes flexible premium variable annuities, single and flexible premium deferred annuities, single premium immediate annuities, proprietary mutual funds, investment management services, and certain other financial services products. The Company's Other Products segment primarily consists of a securities broker-dealer operation, an insurance brokerage operation, and the run-off businesses. The securities broker-dealer operation markets the Company's proprietary investment products and, in addition, provides customers of the Company's protection and accumulation products access to other non-proprietary investment products (including stocks, bonds, limited partnership interests, tax-exempt unit investment trusts and other investment securities). The insurance brokerage operation provides the Company's career agency force with access to variable life, annuity, small group health and specialty insurance products written by other carriers to meet the insurance and investment needs of its customers. The run-off businesses primarily consist of group life and health business, as well as group pension business that was not included in the Group Pension Transaction (See Note 11). Set forth in the table below is certain financial information with respect to the Company's reportable segments as of and for each of the years ended December 31, 2002, 2001, and 2000, as well as amounts not allocated to the segments. Except for various allocations discussed below, the accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 3). The Company evaluates the performance of each operating segment based on profit or loss from operations before income taxes and nonrecurring items (e.g., items of an unusual or infrequent nature). The Company does not allocate certain non-recurring items to the segments. In addition, unless otherwise noted, all segment revenues are from external customers. Assets have been allocated to the segments in amounts sufficient to support the associated liabilities of each segment and maintain a separately calculated regulatory risk-based capital ("RBC") level for each segment. Allocations of the net investment income and net realized gains (losses) on investments were based on the amount of assets allocated to each segment. Other costs and operating expenses were allocated to each of the segments based on: (i) a review of the nature of such costs, (ii) time studies analyzing the amount of employee compensation costs incurred by each segment, and (iii) cost estimates included in the Company's product pricing. Substantially all non-cash transactions and impaired real estate (including real estate acquired in satisfaction of debt) have been allocated to the Protection Products segment. F-164 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 7. Segment Information: (continued) Amounts reported as "reconciling amounts" in the table below primarily relate to: (i) contracts issued by the Company relating to its employee benefit plans, (ii) interest expense associated with the surplus and intercompany surplus notes, (iii) charges totaling $7.2 million and $56.8 million in 2002 and 2001, respectively, associated with the Company's reorganization (see Note 22), and (iv) a $1.5 million decrease in 2002 in certain reserves established in connection with the reorganization charge recorded in 2001 (see Note 22). Segment Summary Financial Information
2002(5) 2001(3)(6) 2000(7) ------- ---------- -------- ($ in millions) Premiums: Protection Products...................................................... $662.9 $675.5 $ 685.7 Accumulation Products.................................................... 11.6 5.3 1.3 Other Products........................................................... 15.9 14.5 13.5 ------ ------ -------- $690.4 $695.3 $ 700.5 ====== ====== ======== Universal life and investment-type product policy fees: Protection Products...................................................... $152.1 $151.6 $ 134.8 Accumulation Products.................................................... 46.8 54.7 70.0 Other Products........................................................... 1.6 0.9 1.0 ------ ------ -------- $200.5 $207.2 $ 205.8 ====== ====== ======== Net investment income and net realized gains (losses) on investments (8): Protection Products...................................................... $467.8 $559.4 $ 796.7 Accumulation Products.................................................... 58.8 68.6 124.9 Other Products........................................................... 21.3 17.9 68.9 Reconciling amounts (4).................................................. 22.5 18.7 17.9 ------ ------ -------- $570.4 $664.6 $1,008.4 ====== ====== ======== Other income: Protection Products...................................................... $ 84.0 $ 46.8 $ 57.7 Accumulation Products.................................................... 96.1 107.4 120.2 Other Products........................................................... 60.7 57.5 77.4 Reconciling amounts...................................................... 10.8 8.1 5.1 ------ ------ -------- $251.6 $219.8 $ 260.4 ====== ====== ======== Benefits to policyholders (1): Protection Products...................................................... $794.2 $815.1 $ 791.1 Accumulation Products.................................................... 87.9 75.4 68.2 Other Products........................................................... 30.4 29.2 31.5 Reconciling amounts...................................................... 9.9 5.5 7.6 ------ ------ -------- $922.4 $925.2 $ 898.4 ====== ====== ======== Amortization of deferred policy acquisition costs: Protection Products...................................................... $110.3 $115.7 $ 110.8 Accumulation Products.................................................... 45.8 26.1 28.3 Reconciling amounts...................................................... 0.0 17.0 0.0 ------ ------ -------- $156.1 $158.8 $ 139.1 ====== ====== ========
F-165 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 7. Segment Information: (continued)
2002(5) 2001(3)(6) 2000(7) --------- ---------- --------- ($ in millions) Other operating costs and expenses: Protection Products................ $ 226.6 $ 245.5 $ 262.2 Accumulation Products.............. 119.4 127.2 120.0 Other Products..................... 83.3 87.3 100.3 Reconciling amounts................ 30.1 59.4 20.8 --------- --------- --------- $ 459.4 $ 519.4 $ 503.3 ========= ========= ========= Income before income taxes (8)(9): Protection Products................ $ 50.1 $ 23.1 $ 278.1 Accumulation Products.............. (41.0) 5.7 98.4 Other Products..................... (15.4) (27.3) 27.7 Reconciling amounts................ (6.7) (54.6) (5.4) --------- --------- --------- $ (13.0) $ (53.1) $ 398.8 ========= ========= ========= Assets: Protection Products................ $12,258.0 $16,212.9 $16,239.0 Accumulation Products.............. 4,521.8 5,077.7 5,593.5 Other Products..................... 988.2 1,125.7 1,060.8 Reconciling amounts................ 727.9 994.8 1,309.0 --------- --------- --------- $18,495.9 $23,411.1 $24,202.3 ========= ========= ========= Deferred policy acquisition costs: Protection Products................ $ 1,093.3 $ 1,087.0 $ 1,064.3 Accumulation Products.............. 133.1 146.8 145.4 --------- --------- --------- $ 1,226.4 $ 1,233.8 $ 1,209.7 ========= ========= ========= Future policy benefits: Protection Products................ $ 7,543.3 $ 7,467.2 $ 7,384.8 Accumulation Products.............. 188.6 173.5 163.4 Other Products..................... 203.1 213.9 229.6 Reconciling amounts................ 14.9 15.4 16.7 --------- --------- --------- $ 7,949.9 $ 7,870.0 $ 7,794.5 ========= ========= ========= Unearned premiums: Protection Products................ $ 54.7 $ 53.1 $ 47.9 Accumulation Products.............. -- -- -- Other Products..................... 2.6 2.8 2.5 Reconciling amounts................ -- -- -- --------- --------- --------- $ 57.3 $ 55.9 $ 50.4 ========= ========= =========
F-166 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 7. Segment Information: (continued)
2002(5) 2001(3)(6) 2000(7) -------- ---------- -------- ($ in millions) Policyholders' balances and other policyholders' liabilities: Protection Products.......................................... $1,629.8 $2,845.9 $2,858.0 Accumulation Products........................................ 1,225.5 969.0 896.6 Other Products............................................... 155.7 145.3 149.3 Reconciling amounts.......................................... 0.6 0.9 1.0 -------- -------- -------- $3,011.6 $3,961.1 $3,904.9 ======== ======== ======== Separate account liabilities (2)(10): Protection Products (11)..................................... $ 604.6 $3,783.7 $3,939.5 Accumulation Products........................................ 2,699.0 3,464.3 4,072.9 Other Products............................................... 298.1 429.7 499.5 Reconciling amounts.......................................... 535.9 694.1 770.1 -------- -------- -------- $4,137.6 $8,371.8 $9,282.0 ======== ======== ========
---------- (1) Includes interest credited to policyholders' account balances. (2) Each segment includes separate account assets in an amount not less than the corresponding liability reported. (3) See Note 22 for details regarding the allocation of Reorganization and Other Charges to segments. (4) Reconciling amounts include interest expense related to the Intercompany Surplus Notes (see Note 14). (5) Amounts reported as "reconciling" in 2002 primarily relate to: (i) contracts issued by MONY Life relating to its employee benefit plans, (ii) interest expense associated with the surplus and intercompany surplus notes, (iii) charges totaling $7.2 million pre-tax relating to the Company's 2002 reorganization charge (See Note 22), and (iv) a $1.5 million decrease in certain reserves associated with the Company's 2001 reorganization charge (See Note 22). (6) Amounts reported as "reconciling" in 2001 primarily relate to: (i) contracts issued by MONY Life relating to its employee benefit plans, (ii) interest expense associated with the surplus and intercompany surplus notes and (iii) charges totaling $56.8 million pre-tax relating to the Company's reorganization. (7) Amounts reported as "reconciling" in 2000 primarily relate to (i) contracts issued by MONY Life relating to its employee benefit plans and (ii) interest expense associated with the surplus and intercompany surplus notes. (8) Amounts reported in 2002 include a loss of $3.9 million pre-tax from discontinued operations, of which $3.3 million, $0.4 million, and $0.2 million, has been allocated to the Protection Products, Accumulation Products and Other Products segments, respectively. (9) Amounts reported in 2000 include an extraordinary charge of $37.7 million after tax for the cost incurred by the Company in connection with the repurchase of $115.0 million face amount 9.5% coupon surplus notes, and $123.0 million of its $125.0 million face amount 11.25% coupon surplus notes that were outstanding at December 31, 1999 (see Note 14). (10)Includes separate account liabilities relating to the Group Pension Transaction of $0.0 million, $3,179.5 million, and $3,416.7 million as of December 31, 2002, 2001, and 2000, respectively (see Note 11). (11)As explained in note 11, in accordance with GAAP, the Group Pension Transaction did not constitute a sale because the Company retained substantially all the risks and rewards associated with the business transferred to Aegon USA, Inc. ("AEGON"). Accordingly, over the life of the transaction the Company was required to reflect the transferred assets and liabilities on its balance sheet under separate captions entitled "Assets transferred in Group Pension Transaction" and "Liabilities transferred in Group Pension Transaction". As a result of the expiration of the transaction at December 31, 2002 and the recognition of earnings from the Final Value Payment from AEGON the Company has no further interest in the transferred assets and liabilities and, accordingly, such assets and liabilities are no longer reflected on its balance sheet. Substantially all of the Company's revenues are derived in the United States. Revenue derived from outside the United States is not material and revenue derived from any single customer does not exceed 10.0% of total consolidated revenues. F-167 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 7. Segment Information: (continued) Following is a summary of revenues by product for the years ended December 31, 2002, 2001, and 2000:
2002 2001 2000 ------ ------ ------ ($ in millions) Premiums: Individual life........................................ $662.6 $675.1 $685.2 Disability income insurance............................ 0.3 0.4 0.5 Group insurance........................................ 15.9 14.5 13.5 Other.................................................. 11.6 5.3 1.3 ------ ------ ------ Total........................................... $690.4 $695.3 $700.5 ====== ====== ====== 2002 2001 2000 ------ ------ ------ ($ in millions) Universal life and investment-type product policy fees: Universal life......................................... $ 64.8 $ 68.8 $ 69.0 Variable universal life................................ 78.1 73.4 54.7 Group universal life................................... 9.2 9.4 11.1 Individual variable annuities.......................... 46.8 54.7 69.7 Individual fixed annuities............................. 1.6 0.9 1.3 ------ ------ ------ Total........................................... $200.5 $207.2 $205.8 ====== ====== ======
8. Deferred Policy Acquisition Costs: Policy acquisition costs deferred and amortized in 2002, 2001, and 2000 are as follows:
2002 2001 2000 -------- -------- -------- ($ in millions) Balance, beginning of the year............... $1,233.8 $1,209.7 $1,248.2 Costs deferred during the year............... 213.1 209.1 190.9 Amortized to expense during the year......... (156.1) (158.8) (139.1) Effect on DPAC from unrealized (gains) losses (64.4) (26.2) (90.3) -------- -------- -------- Balance, end of the year..................... $1,226.4 $1,233.8 $1,209.7 ======== ======== ========
9. Pension Plans and Other Postretirement Benefits: Pension Plans The Company has a qualified pension plan covering substantially all of its salaried employees. The provisions of the plan provide both (a) defined benefit accruals based on: (i) years of service, (ii) the employee's final average annual compensation and (iii) wage bases or benefits under Social Security and (b) defined contribution accruals based on a Company matching contribution equal to 100% of the employee's elective deferrals under the incentive savings plan for employees up to 3% of the employee's eligible compensation and an additional 2% of eligible compensation for each active participant. Effective June 15, 1999, prospective defined contribution accruals in the defined benefit plan ceased and were redirected to the Investment Plan Supplement for Employees of MONY Life. The Company did not make any contribution in the current year or prior year under Section 404 of the Internal Revenue Code ("IRC") because the plan was fully funded under Section 412 of the IRC. F-168 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 9. Pension Plans and Other Postretirement Benefits: (continued) During 2002, the Company amended its Qualified Pension plan which increased certain benefit liabilities payable thereunder. The amendment resulted in an increase of $3.7 million in the plan's projected benefit obligation. The assets of the qualified pension plan are primarily invested in MONY Pooled Accounts which include common stock, real estate, private placement debt securities and bonds. At December 31, 2002 and 2001, $304.7 million and $415.3 million, respectively, were invested in the MONY Pooled Accounts. Benefits of $30.2 million, $27.9 million and $33.9 million were paid by this plan for the years ended December 31, 2002, 2001, and 2000, respectively. The Company also sponsors a non-qualified employee excess benefit plan, which provides both defined benefits and defined contribution accruals in excess of Internal Revenue Service limits to certain employees. The benefits are based on years of service and the employee's compensation. Pension benefits are paid from the Company's general account. Postretirement Benefits The Company provides certain health care and life insurance benefits for retired employees and field underwriters. The Company amortizes its postretirement transition obligation over a period of twenty years. Assumed health care cost trend rates typically have a significant effect on the amounts reported for health care plans, however, under the Company's postretirement healthcare plan, there is a per capita limit on the Company's healthcare costs. As a result, a one-percentage point change in the assumed healthcare cost trend rates would have an immaterial effect on amounts reported. F-169 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 9. Pension Plans and Other Postretirement Benefits: (continued) The following presents the change in the benefit obligation, change in plan assets and other information with respect to the Company's qualified and non-qualified defined benefit pension plans and other benefits which represent the Company's postretirement benefit obligation:
Pension Other Benefits Benefits -------------- ---------------- 2002 2001 2002 2001 ------ ------ ------- ------- ($ in millions) Change in benefit obligation: Benefit obligation at beginning of year............................................ $411.5 $386.1 $ 104.7 $ 103.9 Service cost....................................................................... 5.9 8.3 1.5 1.5 Interest cost...................................................................... 29.2 30.9 6.7 7.2 Plan amendment..................................................................... 3.7 1.8 -- -- Actuarial loss..................................................................... 18.0 25.8 (0.9) 0.5 Benefits paid...................................................................... (36.9) (41.4) (9.9) (8.4) ------ ------ ------- ------- Benefit obligation at end of year.................................................. $431.4 $411.5 $ 102.1 $ 104.7 ====== ====== ======= ======= Change in plan assets: Fair value of plan assets at beginning of year..................................... $419.5 $469.9 $ -- $ -- Actual return on plan assets....................................................... (32.6) (20.5) -- -- Employer contribution.............................................................. 6.7 13.5 9.9 8.4 Benefits and expenses paid......................................................... (38.7) (43.4) (9.9) (8.4) ------ ------ ------- ------- Fair value of plan assets at end of year........................................... 354.9 419.5 -- -- ------ ------ ------- ------- Funded status...................................................................... (76.5) 8.0 (102.1) (103.7) Unrecognized actuarial loss........................................................ 176.6 98.4 12.1 12.1 Unamortized transition obligation.................................................. 1.7 2.1 30.6 33.6 Unrecognized prior service cost.................................................... 1.5 (11.4) (0.7) (0.8) ------ ------ ------- ------- Net amount recognized.............................................................. $103.3 $ 97.1 $ (60.1) $ (58.8) ====== ====== ======= ======= Amounts recognized in the statement of financial position consist of the following: Prepaid benefit cost............................................................... $151.0 $145.4 $ -- $ -- Accrued benefit liability.......................................................... (66.6) (48.3) (60.1) (58.8) Intangible asset................................................................... 1.7 2.1 -- -- Accumulated other comprehensive income............................................. 17.2 (2.1) -- -- ------ ------ ------- ------- Net amount recognized.............................................................. $103.3 $ 97.1 $ (60.1) $ (58.8) ====== ====== ======= =======
The Company's qualified plan had assets of $345.7 million and $419.5 million at December 31, 2002 and 2001, respectively. The projected benefit obligation and accumulated benefit obligation for the qualified plan were $365.2 million and $338.9 million at December 31, 2002 and $343.5 million and $310.6 million at December 31, 2001, respectively. The projected benefit obligation and accumulated benefit obligation for the non-qualified defined benefit pension plan, which is unfunded, were $68.2 million and $66.6 million at December 31, 2002 and $68.0 million and $65.6 million at December 31, 2001, respectively. F-170 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 9. Pension Plans and Other Postretirement Benefits: (continued)
Pension Other Benefits Benefits ---------- -------- 2002 2001 2002 2001 ---- ---- ---- ---- Weighted-average assumptions for the year ended December 31: Discount rate............................................... 6.6% 7.3% 6.6% 7.3% Expected return on plan assets.............................. 10.0% 10.0% 0.0% 0.0% Rate of compensation increase (1)........................... -- -- 5.0% 5.0%
---------- (1)For pension benefits, no benefits bearing incentive compensation is assumed for 2002. Otherwise benefits bearing compensation is assumed to increase by 4% for all participants eligible for incentive compensation and by 5% for all others. Benefits bearing incentive compensation for the top four officers is assumed to be 50% of base salary after 2002. Since postretirement life insurance benefits are subject to a cap of either $50,000 or salary in 1995, if greater, the rate of compensation increase has no significant impact on the values noted above. For measurement purposes, a 10% percent annual rate of increase in the per capita cost of covered health care benefits was assumed for 2002. The rate was assumed to decrease gradually to 6% percent for 2010 and remain at that level thereafter. Components of net periodic benefit cost for the pension and other post-retirement plans are as follows:
Pension Benefits Other Benefits ---------------------- ------------------- 2002 2001 2000 2002 2001 2000 ------ ------ ------ ----- ----- ----- ($ in millions) Components of net periodic benefit cost: Service cost............................ $ 5.9 $ 8.3 $ 6.1 $ 1.5 $ 1.5 $ 1.2 Interest cost........................... 29.2 30.9 29.4 6.7 7.2 6.5 Expected return on plan assets.......... (39.8) (45.5) (46.9) -- -- -- Amortization of prior service cost...... (0.3) (0.8) (1.5) (0.1) (0.2) (0.1) Curtailment gain........................ -- -- (2.0) -- -- -- Recognized net actuarial loss/(gain).... 4.6 1.1 (0.2) -- -- -- Amortization of transition items........ 0.3 (7.5) (7.9) 3.1 3.1 3.1 ------ ------ ------ ----- ----- ----- Net periodic benefit cost............... $ (0.1) $(13.5) $(23.0) $11.2 $11.6 $10.7 ====== ====== ====== ===== ===== =====
The Company also has a qualified money purchase pension plan covering substantially all career field underwriters. Company contributions of 5% of earnings plus an additional 2% of such earnings in excess of the social security wage base are made each year. At December 31, 2002 and 2001, the fair value of plan assets was $165.1 million and $198.9 million, respectively. For the years ended December 31, 2002, 2001, and 2000, the Company contributed $2.8 million, $3.2 million and $3.2 million to the plan, respectively, which amounts are reflected in other operating costs and expenses in the Company's consolidated statement of income and comprehensive income. The Company has a non-qualified defined contribution plan, which is unfunded. The non-qualified defined contribution plan projected benefit obligation, which equaled the accumulated benefit obligation, was $52.9 million and $59.5 million as of December 31, 2002 and 2001, respectively. The non-qualified defined contribution plan's net periodic expense was $(2.7) million, $(0.2) million and $7.2 million for the years ended December 31, 2002, 2001, and 2000, respectively. The Company also has incentive savings plans in which substantially all employees and career field underwriters are eligible to participate. The Company matches field underwriter contributions up to 2% of eligible compensation and may also make an additional profit sharing contribution for non-officer employees. As with the employee excess plan, the Company also sponsors F-171 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 9. Pension Plans and Other Postretirement Benefits: (continued) non-qualified excess defined contribution plans for both the field underwriter retirement plan and the incentive savings plan for field underwriters. The Company also sponsors several other 401(k) plans for its smaller subsidiaries which the Company considers immaterial. 10. Income Taxes: The Company files a consolidated federal income tax return with its ultimate parent, the MONY Group, and its other subsidiaries, as well as the Company's life and non-life affiliates except Sagamore Financial Corporation and its subsidiaries (see Note 3). Federal income taxes have been calculated in accordance with the provisions of the Internal Revenue Code of 1986, as amended. A summary of the income tax (benefit)/expense is presented below:
2002 2001 2000 ------ ------ ------ ($ in millions) Income tax (benefit) expense: Current.................................................. $(39.0) $ 11.6 $ 82.1 Deferred................................................. 33.0 (7.5) 52.7 ------ ------ ------ Income tax (benefit)/expense from continuing operations..... (6.0) (19.1) 134.8 Discontinued operations..................................... (1.4) -- -- Extraordinary item.......................................... -- -- (20.3) ------ ------ ------ Total................................................ $ (7.4) $(19.1) $114.5 ====== ====== ======
Income taxes reported in the consolidated statement of income and comprehensive income are different from the amounts determined by multiplying the earnings before income taxes by the statutory federal income tax rate of 35%. The sources of the difference and the tax effects of each are as follows:
2002 2001 2000 ----- ------ ------ ($ in millions) Tax at statutory rate....................................... $(7.4) $(19.1) $139.6 Dividends received deduction................................ (1.2) -- (2.5) Goodwill.................................................... -- -- -- Tax Return to Provisions Differences........................ -- (4.0) -- Tax settlements/accrual adjustments......................... (2.6) 3.2 (2.3) Meals & Entertainment....................................... 1.5 (0.4) -- Officers' Life Insurance.................................... 3.7 1.2 -- ----- ------ ------ Federal Income tax (benefit)/expense from continuing operations................................................ (6.0) (19.1) 134.8 Discontinued operations................................... (1.4) -- -- Extraordinary item........................................ -- -- (20.3) ----- ------ ------ Provision for income taxes.................................. $(7.4) $(19.1) $114.5 ===== ====== ======
MONY Group's income tax returns for years through 1993 have been examined by the Internal Revenue Service ("IRS"). No material adjustments were proposed by the IRS as a result of these examinations. In the opinion of management, adequate provision has been made for any additional taxes which may become due with respect to open years. F-172 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 10. Income Taxes: (continued) The components of deferred tax liabilities and assets at December 31, 2002 and 2001 are as follows: 2002 2001 ------- ------- ($ in millions) Deferred policy acquisition costs.............. $ 134.1 $ 310.1 Fixed maturity securities and equity securities 187.5 108.8 Other, net (1)................................. 82.6 185.4 Nonlife subsidiaries........................... (10.4) (4.8) ------- ------- Total deferred tax liabilities.......... 393.8 599.5 ------- ------- Policyholder and separate account liabilities.. 133.0 392.7 Accrued expenses............................... (8.6) 11.8 Deferred compensation and benefits............. 25.6 66.4 Policyholder dividends......................... (5.2) -- Real estate and mortgages...................... 9.9 (15.0) ------- ------- Total deferred tax assets............... 154.7 455.9 ------- ------- Net deferred tax liability.............. $(239.1) $(143.6) ======= ======= ---------- (1)Includes $0.0 million and $10.9 million at December 31, 2002 and 2001 of deferred taxes relating to net unrealized gains on fixed maturity securities in the AEGON Portfolio (see Note 11). The Company is required to establish a valuation allowance for any portion of the deferred tax asset that management believes will not be realized. In the opinion of management, it is more likely than not that it will realize the benefit of the deferred tax assets; therefore, no such valuation allowance has been established. 11. The Group Pension Transaction: On December 31, 1993 (the "Group Pension Transaction Date"), the Company entered into an agreement (the "Agreement") with AEGON USA, Inc. ("AEGON") under which the Company transferred a substantial portion of its group pension business (hereafter referred to as the "Group Pension Transaction"), including its full service group pension contracts, consisting primarily of tax-deferred annuity, 401(k) and managed funds lines of business, to AEGON's wholly-owned subsidiary, AUSA Life Insurance Company, Inc. ("AUSA"). The Company also transferred to AUSA the corporate infrastructure supporting the group pension business, including data processing systems, facilities and regional offices. AUSA was newly formed by AEGON solely for the purpose of facilitating this transaction. In connection with the transaction, the Company and AEGON have entered into certain service agreements. These agreements, among other things, provide that the Company will continue to manage the transferred assets, and that AUSA will continue to provide certain administrative services to the Company's remaining group pension contracts not included in the transfer. Pursuant to the Agreement, the Company agreed to make a $200 million capital investment in AEGON by purchasing $150 million face amount of Series A Notes and $50 million face amount of Series B Notes (hereinafter referred to as the "Notes"). The Series A Notes pay interest at 6.44% per annum and the Series B Notes pay interest at 6.24% per annum. The Series B Notes matured on December 31, 2002 and the Series A Notes mature on April 7, 2003. The Company's investment in the Series A Notes was intended to provide AEGON with the funding necessary to capitalize AUSA. In accordance with GAAP, the transaction did not constitute a sale because the Company retained substantially all the risks and rewards associated with the existing deposits on the transferred business (the "Existing Deposits"). Accordingly, the Company reflects the transferred assets and liabilities on its balance sheet under separate captions entitled "Assets transferred in Group F-173 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 11. The Group Pension Transaction: (continued) Pension Transaction" and "Liabilities transferred in Group Pension Transaction" until the expiration of the agreement, December 31, 2002. In addition, the Company reports in its GAAP earnings the profits from the Existing Deposits as discussed below. Pursuant to the Agreement, the Company received from AUSA: (i) payments on an annual basis through December 31, 2002 (the "Group Pension Payments") equal to all of the earnings from the Existing Deposits, (ii) a final payment (the "Final Value Payment") at December 31, 2002 based on the remaining fair value of the Existing Deposits, and (iii) a contingent payment (the "New Business Growth Payment") at December 31, 2002 based on new business growth subsequent to the Transaction Date. With respect to the Group Pension Payments, the annual results from the Existing Deposits are measured on a basis in accordance with the Agreement (such basis hereafter referred to as the "Earnings Formula") which is substantially the same as GAAP, except that: (i) asset impairments on fixed maturity securities are only recognized when such securities are designated with an NAIC rating of "6", and (ii) no impairment losses are recognized on mortgage loans until such loans are disposed of, or at the time and in the calculation, of the Final Value Payment. All mortgage loans had been disposed of prior to the calculation of the Final Value Payment. Earnings which emerge from the Existing Deposits pursuant to the application of the Earnings Formula are recorded in the Company's financial statements only after adjustments (primarily to recognize asset impairments in accordance with SFAS Nos. 114 and 115) to reflect such earnings on a basis entirely in accordance with GAAP (such earnings hereafter referred to as the "Group Pension Profits"). Losses which arise from the application of the Earnings Formula for any annual period will be reflected in the Company's results of operations (after adjustments to reflect such losses in accordance with GAAP) only up to the amount for which the Company is at risk (as described below), which at any time is equal to the then outstanding principal amount of the Series A Notes. Operating losses reported in any annual period pursuant to the Earnings Formula are carried forward to reduce any earnings in subsequent years reported pursuant to the Earnings Formula. Any resultant deficit remaining at December 31, 2002 will be deducted from the Final Value Payment and New Business Growth Payment, if any, due to the Company. If a deficit still remains, it will be applied (as provided for in the Agreement) as an offset against the principal payment due to the Company upon maturity of the Series A Notes. As of December 31, 2002, there were no operating losses reported in any annual period during the term of the agreement, nor was the Company eligible for any New Business Growth payment. For the years ended December 31, 2002, 2001, and 2000, AUSA reported earnings to the Company pursuant to the application of the Earnings Formula of $19.1 million, $27.4 million, and $26.9 million, respectively, and the Company recorded Group Pension Profits of $28.2 million, $30.7 million and $37.1 million, respectively. In addition, the Company earned $12.8 million of interest income on the Notes in each of the aforementioned years. In addition, the Company recorded earnings from the Final Value Payment of $54.1 million (before expenses of approximately $6.0 million relating thereto, which are recorded in "Other operating costs and expenses" in the consolidated statement of income and comprehensive income), on December 31, 2002. F-174 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 11. The Group Pension Transaction: (continued) The following sets forth certain summarized financial information relating to the Group Pension Transaction as of and for the periods indicated, including information regarding: (i) the general account assets transferred to support the Existing Deposits in the Group Pension Transaction (such assets hereafter referred to as the "AEGON Portfolio"), (ii) the transferred separate account assets and liabilities, and (iii) the components of revenue and expenses comprising the Group Pension Profits:
As of December 31, ------------------ 2002(3) 2001 ------- -------- ($ in million) Assets: General Account Fixed maturity securities: available-for-sale, at estimated fair value (amortized cost of $1,371.2) $-- $1,400.5 Mortgage loans on real estate...................................................................... -- 26.5 Cash and cash equivalents.......................................................................... -- 19.4 Accrued investment income.......................................................................... -- 24.5 --- -------- Total general account assets....................................................................... -- 1,470.9 Separate account assets............................................................................. -- 3,179.5 --- -------- Total assets................................................................................. $-- $4,650.4 === ======== Liabilities: General account liabilities (1) Policyholders' account balances.................................................................... $-- $1,398.8 Other liabilities.................................................................................. -- 18.8 --- -------- Total general account liabilities.................................................................. -- 1,417.6 Separate account liabilities (2).................................................................... -- 3,179.5 --- -------- Total liabilities............................................................................ $-- $4,597.1 === ========
---------- (1)Includes general account liabilities transferred in connection with the Group Pension Transaction pursuant to indemnity reinsurance of $71.2 million as of December 31, 2001. (2)Includes separate account liabilities transferred in connection with the Group Pension Transaction pursuant to indemnity reinsurance of $11.8 million as of December 31, 2001. (3)In accordance with GAAP, the Group Pension Transaction did not constitute a sale because the Company retained substantially all the risks and rewards associated with the business transferred to AEGON. Accordingly, over the life of the transaction the Company was required to reflect the transferred assets and liabilities on its balance sheet under separate captions entitled "Assets transferred in Group Pension Transaction" and "Liabilities transferred in Group Pension Transaction". As a result of the expiration of the transaction at December 31, 2002 and the recognition of earnings from the Final Value Payment from AEGON the Company has no further interest in the transferred assets and liabilities and, accordingly, such assets and liabilities are no longer reflected on its balance sheet. F-175 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 11. The Group Pension Transaction: (continued)
For the Year Ended December 31, ------------------------------ 2002 2001 2000 ------ ------ ------ ($ in millions) Revenues: Product policy fees......................................... $ 18.3 $ 19.6 $ 26.3 Net investment income....................................... 88.2 102.0 113.5 Net realized gains (losses) on investments (2).............. 0.8 1.5 (1.2) ------ ------ ------ Total revenues....................................... 107.3 123.1 138.6 Benefits and Expenses: Interest credited to policyholders' account balances........ 63.5 74.8 84.6 Other operating costs and expenses.......................... 15.6 17.6 16.9 ------ ------ ------ Total benefits and expenses............................... 79.1 92.4 101.5 ------ ------ ------ Group Pension Profit...................................... 28.2 30.7 37.1 Final value payment (1)..................................... 54.1 -- -- ------ ------ ------ Total................................................ $ 82.3 $ 30.7 $ 37.1 ====== ====== ======
---------- (1)Expenses of approximately $6.0 million relating to the Final Value Payment are recorded in "Other operating costs and expenses" on the Company's consolidated statement of income and comprehensive income. (2)Includes $2.5 million of pretax realized losses ($1.6 million after-tax) relating to the impairment of certain investments, which were included in the 4/th/ quarter 2001 Other Charges (see Note 22). 12. Estimated Fair Value of Financial Instruments The estimated fair values of the Company's financial instruments approximate their carrying amounts, except for mortgage loans, long-term debt and investment-type contracts. The methods and assumptions utilized in estimating the fair values of the Company's financial instruments are summarized as follows: Fixed Maturity and Equity Securities The estimated fair values of fixed maturity securities are based upon quoted market prices, where available. The fair values of fixed maturity securities not actively traded and other non-publicly traded securities are estimated using values obtained from independent pricing services or, in the case of private placements, by discounting expected future cash flows using a current market interest rate commensurate with the credit quality and term of the investments. Equity securities primarily consist of investments in common stocks and limited partnership interests. The fair value of the Company's investments in common stocks is determined based on quoted market prices, where available. The fair value of the Company's investments in limited partnership interests is based on amounts reported by such partnerships to the Company. Mortgage Loans The fair value of mortgage loans is estimated by discounting expected future cash flows, using current interest rates for similar loans to borrowers with similar credit risk. Loans with similar characteristics are aggregated for purposes of the calculations. The fair value of mortgages in process of foreclosure is the estimated fair value of the underlying collateral. At December 31, 2002 and 2001, the fair value of mortgage loans was $2,065.5 million and $1,880.8 million, respectively. Policy Loans Policy loans are an integral component of insurance contracts and have no maturity dates. Management has determined that it is not practicable to estimate the fair value of policy loans. F-176 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 12. Estimated Fair Value of Financial Instruments (continued) Long-term Debt The fair value of long-term debt is determined based on contractual cash flows discounted at market rates. Separate Account Assets and Liabilities The estimated fair value of assets and liabilities held in separate accounts is based on quoted market prices. Investment-Type Contracts The fair values of annuities are based on estimates of the value of payments available upon full surrender. The carrying value and fair value of annuities at December 31, 2002 were $1,459.2 million and $1,439.4 million, respectively. The carrying value and fair value of annuities at December 31, 2001 were $1,196.8 million and $1,187.6 million, respectively. 13. Reinsurance: Life insurance business is primarily ceded on a yearly renewable term basis under various reinsurance contracts except for the level term product which utilizes a coinsurance agreement. The Company's general practice is to retain no more than $4.0 million of risk on any one person for individual products and $6.0 million for last survivor products. The Company has entered into coinsurance agreements with other insurers related to a portion of its extended term insurance, guaranteed interest contract and long-term disability claim liabilities, and reinsures approximately 50% of its block of paid-up life insurance policies. The following table summarizes the effect of reinsurance for the years indicated:
2002 2001 2000 ------- ------- ------- ($ in millions) Direct premiums (includes $65.0 million, $68.3 million and $70.9 million of accident and health premiums for 2002, 2001, and 2000, respectively)............................................ $ 801.7 $ 803.6 $ 806.0 Reinsurance assumed.............................................. 7.2 6.0 5.3 Reinsurance ceded (includes ($64.6) million, ($67.8) million and ($70.4) million of accident and health premiums for 2002, 2001, and 2000, respectively).................................. (118.5) (114.3) (110.8) ------- ------- ------- Net premiums..................................................... $ 690.4 $ 695.3 $ 700.5 ======= ======= ======= Universal life and investment type product policy fee income ceded.......................................................... $ 34.5 $ 27.7 $ 26.0 ======= ======= ======= Policyholders' benefits ceded.................................... $ 129.0 $ 126.4 $ 137.4 ======= ======= ======= Interest credited to policyholders' account balances ceded....... $ 2.9 $ 3.7 $ 3.6 ======= ======= =======
The Company is primarily liable with respect to ceded insurance should any reinsurer be unable to meet its obligations under these agreements. To limit the possibility of such losses, the Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk. F-177 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 14. Long Term Debt: The Company's long term debt at December 31, 2002 and 2001 consists of the following:
2002 2001 ------ ------ ($ in millions) Surplus notes................... $ 1.9 $ 1.9 Intercompany Surplus Notes...... 215.0 215.0 ------ ------ Total long term debt..... $216.9 $216.9 ====== ======
Surplus and Senior Notes On January 12, 2000, the MONY Group filed a registration statement on Form S-3 with the Securities and Exchange Commission (the "SEC") to register certain securities. This registration, known as a "Shelf Registration", provides the Company with the ability to offer various securities to the public, when it deems appropriate, to raise proceeds up to an amount not to exceed $1.0 billion in the aggregate for all issuances of securities thereunder. It is the intention of the Company to use this facility to raise proceeds for mergers and acquisitions and for other general corporate matters, as it considers necessary. On March 8, 2000, the MONY Group issued $300.0 million principal amount of senior notes (the "$300 million Senior Notes") pursuant to the aforementioned Shelf Registration. The $300 million Senior Notes mature on March 15, 2010 and bear interest at 8.35% per annum. The principal amount of the $300 million Senior Notes is payable at maturity and interest is payable semi-annually. The net proceeds to the MONY Group from the issuance of the $300 million Senior Notes, after deducting underwriting commissions and other expenses (primarily legal and accounting fees), were approximately $296.6 million. Approximately $280.0 million of the net proceeds from the issuance of the Senior Notes was used by the MONY Group to finance MONY Life's repurchase, on March 8, 2000, of all of its outstanding $115.0 million face amount 9.5% coupon surplus notes, and $116.5 million face amount of its $125.0 million face amount 11.25% coupon surplus notes (hereafter referred to as the "9.5% Notes" and the "11.25% Notes", respectively), which were previously outstanding. The balance of the net proceeds from the issuance of the Senior Notes was retained by the MONY Group for general corporate purposes. In the third quarter of 2000 and first quarter of 2001, the Company repurchased another $6.5 million and $0.1 million face amount of the 11.25% notes, respectively, resulting in a remaining balance of $1.9 million at December 31, 2002. MONY Group's financing of MONY Life's repurchase of its 9.5% Notes and 11.25% Notes consisted of a capital contribution by MONY Group to MONY Life of $65.0 million and the purchase by MONY Group from MONY Life of two separate newly issued "intercompany" surplus notes. The intercompany surplus note issued to replace the 9.5% Notes has a par value of $115 million, a coupon rate of interest of 8.65%, and matures on December 31, 2012. The intercompany surplus note issued to replace the 11.25% Notes has a par value of $100 million, a coupon rate of interest of 8.65%, and matures on August 15, 2024. Principal on the intercompany surplus notes is payable at maturity and interest is payable semi-annually. As a result of the repurchase of the 9.5% Notes and substantially all of the 11.25% Notes, the Company recorded a pre-tax tax loss of $58.0 million ($37.7 million after tax) during 2000. The loss resulted from the premium paid by MONY Life to the holders of the 9.5% Notes and the 11.25% Notes reflecting the excess of their fair value over their carrying value on the Company's books at the date of the transaction of approximately $7.0 million and $51.1 million, respectively. This loss is reported, net of tax, as an extraordinary item on the Company's statement of income and comprehensive income for the year ended December 31, 2000. 15. Securities Lending and Concentration of Credit Risk: Securities Lending Risk: Pursuant to a securities lending agreement with a major financial institution, the Company from time to time lends securities to approved borrowers. At December 31, 2002 and 2001, securities loaned by the Company under this agreement had a fair value F-178 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 15. Securities Lending and Concentration of Credit Risk: (continued) of approximately $351.8 million and $161.5 million, respectively. The minimum collateral on securities loaned is 102 percent of the market value of the loaned securities. Such securities are marked to market on a daily basis; the collateral is increased or decreased in accordance with the Company's agent agreement. Concentration of Credit Risk: At December 31, 2002 and 2001, the Company had no single investment or series of investments with a single issuer (excluding U.S. Treasury securities and obligations of U.S. government agencies) exceeding 1.3% and 1.9%, respectively, of total cash and invested assets. The Company's fixed maturity securities are diversified by industry type. The industries (excluding U.S. Treasury securities and obligations of U.S. government agencies) that comprise 10.0% or more of the carrying value of the fixed maturity securities at December 31, 2002 are Consumer Goods of $1,444.8 million (18.3%), Asset/Mortgage Backs securities of $1,031.9 million (13.0%) and Other Manufacturing of $848.0 million (10.8%). The industries (excluding U.S. Treasury securities and obligations of U.S. government agencies) that comprised 10.0% or more of the carrying value of the fixed maturity securities at December 31, 2001 were Consumer Goods of $1,225.1 million (17.6%), Non-Government Asset/Mortgage Backed securities of $793.1 million (11.4%), and Public Utilities of $739.8 million (10.6%). The Company held below investment grade fixed maturity securities with a carrying value of $892.7 million at December 31, 2002. These investments consist mostly of privately issued bonds which are monitored by the Company through extensive internal analysis of the financial condition of the issuers and which generally include protective debt covenants. At December 31, 2001, the carrying value of the Company's investments in below investment grade fixed maturity securities amounted to $603.1 million. The Company has significant investments in commercial and agricultural mortgage loans and real estate (including joint ventures and partnerships). The locations of property collateralizing mortgage loans and real estate investment carrying values at December 31, 2002 and 2001 are as follows:
2002 2001 -------------- -------------- ($ in millions) Geographic Region Mountain......... $ 392.4 18.8% $ 414.2 20.3% Southeast........ 457.2 21.9 449.1 22.0 Midwest.......... 367.8 17.7 336.2 16.5 West............. 367.1 17.6 361.6 17.7 Northeast........ 261.9 12.6 274.1 13.4 Southwest........ 238.0 11.4 205.3 10.1 -------- ----- -------- ----- Total..... $2,084.4 100.0% $2,040.5 100.0% ======== ===== ======== =====
The states with the largest concentrations of mortgage loans and real estate investments at December 31, 2002 are: California, $236.8 million (11.5%); Arizona $212.2 million (10.3%); Texas, $186.2 million (9.1%); Washington D.C., $149.0 million (7.2%); New York, $145.7 million (7.1%); Georgia, $137.5 million (6.7%); and Minnesota, $97.2 million (4.7%). F-179 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 15. Securities Lending and Concentration of Credit Risk: (continued) As of December 31, 2002 and 2001, the real estate and mortgage loan portfolio was also diversified by property type as follows:
2002 2001 -------------- -------------- ($ in millions) Property Type Office buildings.................................. $ 924.2 44.3% $ 873.3 42.7% Agricultural...................................... 308.3 14.8 304.9 15.0 Hotel............................................. 274.3 13.2 297.8 14.6 Retail............................................ 142.9 6.9 138.8 6.8 Other............................................. 123.2 5.9 135.1 6.6 Industrial........................................ 188.2 9.0 156.6 7.7 Apartment buildings............................... 123.3 5.9 134.0 6.6 -------- ----- -------- ----- Total...................................... $2,084.4 100.0% $2,040.5 100.0% ======== ===== ======== =====
16. Commitments and Contingencies: (i) Since late 1995 a number of purported class actions have been commenced in various state and federal courts against MONY Life and MLOA alleging that they engaged in deceptive sales practices in connection with the sale of whole and universal life insurance policies from the early 1980s through the mid 1990s. Although the claims asserted in each case are not identical, they seek substantially the same relief under essentially the same theories of recovery (i.e., breach of contract, fraud, negligent misrepresentation, negligent supervision and training, breach of fiduciary duty, unjust enrichment and violation of state insurance and/or deceptive business practice laws). Plaintiffs in these cases seek primarily equitable relief (e.g., reformation, specific performance, mandatory injunctive relief prohibiting MONY Life and MLOA from canceling policies for failure to make required premium payments, imposition of a constructive trust and creation of a claims resolution facility to adjudicate any individual issues remaining after resolution of all class-wide issues) as opposed to compensatory damages, although they also seek compensatory damages in unspecified amounts. MONY Life and MLOA have answered the complaints in each action (except for one being voluntarily held in abeyance). MONY Life and MLOA have denied any wrongdoing and have asserted numerous affirmative defenses. On June 7, 1996, the New York State Supreme Court certified one of those cases, Goshen v. The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America (now known as DeFilippo, et al v. The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America), the first of the class actions filed, as a nationwide class consisting of all persons or entities who have, or at the time of the policy's termination had, an ownership interest in a whole or universal life insurance policy issued by MONY Life and MLOA and sold on an alleged "vanishing premium" basis during the period January 1, 1982 to December 31, 1995. On March 27, 1997, MONY Life and MLOA filed a motion to dismiss or, alternatively, for summary judgment on all counts of the complaint. All of the other putative class actions have been consolidated and transferred by the Judicial Panel on Multidistrict Litigation to the United States District Court for the District of Massachusetts and/or are being held in abeyance pending the outcome of the Goshen case. On October 21, 1997, the New York State Supreme Court granted MONY Life's and MLOA's motion for summary judgment and dismissed all claims filed in the Goshen case against MONY Life and MLOA. On December 20, 1999, the New York State Court of Appeals affirmed the dismissal of all but one of the claims in the Goshen case (a claim under New York's General Business Law), which has been remanded back to the New York State Supreme Court for further proceedings consistent with the opinion. The New York State Supreme Court subsequently reaffirmed that, for purposes of the remaining New York General Business Law claim, the class is now limited to New York purchasers only. On July 2, 2002, the New York Court of Appeals affirmed the New York State Supreme Court's decision limiting the class to New York purchasers. In addition, the New York State F-180 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 16. Commitments and Contingencies: (continued) Supreme Court has further held that the New York General Business Law claims of all class members whose claims accrued prior to November 29, 1992 are barred by the applicable statute of limitations. MONY Life and MLOA intend to defend themselves vigorously against the sole remaining claim. There can be no assurance, however, that the present litigation relating to sales practices will not have a material adverse effect on them. On November 16, 1999, the MONY Group and MONY Life were served with a complaint in an action entitled Calvin Chatlos, M.D., and Alvin H. Clement, On Behalf of Themselves And All Others Similarly Situated v. The MONY Life Insurance Company, The MONY Group Inc., and Neil D. Levin, Superintendent, New York Department of Insurance, filed in the United States District Court for the Southern District of New York. The action purports to be brought as a class action on behalf of all individuals who had an ownership interest in one or more in force life insurance policies issued by MONY Life as of November 16, 1998. The complaint alleges that (i) the New York Superintendent of Insurance, Neil D. Levin, violated Section 7312 of the New York Insurance Law by approving the Plan of Demutualization, which plaintiffs claim was not fair and adequate, primarily because it allegedly failed to provide for sufficient assets for the mechanism established under the plan to preserve reasonable dividend expectations of the Closed Block, and (ii) MONY Life violated Section 7312 by failing to develop and submit to the New York Superintendent a plan of demutualization that was fair and adequate. The plaintiffs seek equitable relief in the form of an order vacating and/or modifying the New York Superintendent's order approving the Plan of Demutualization and/or directing the New York Superintendent to order MONY Life to increase the assets in the Closed Block, as well as unspecified monetary damages, attorneys' fees and other relief. In early January 2000, the MONY Group, MONY Life and the New York Superintendent wrote to the District Court seeking a pre-motion conference preliminary to the filing of a motion to dismiss the federal complaint on jurisdictional, federal abstention and timeliness grounds and for failure to state a claim. Following receipt of those letters, plaintiffs' counsel offered voluntarily to dismiss their complaint, and a stipulation and order to that effect was thereafter filed and approved by the court. On March 27, 2000, plaintiffs filed a new action in New York State Supreme Court bearing the same caption and naming the same defendants as the previously filed federal action. The state court complaint differed from the complaint previously filed in federal court in two primary respects. First, it no longer asserted a claim for damages against the New York Superintendent, nor did its prayer for relief seek entry of an order vacating or modifying the New York Superintendent's decision or requiring the New York Superintendent to direct MONY Life to place additional assets into the Closed Block. Rather, it sought an accounting and an order from the Court directing MONY Life to transfer additional assets to the Closed Block. Second, the new complaint contains claims for breach of contract and fiduciary duty, as well as new allegations regarding the adequacy of the disclosures contained in the Policyholder Information Booklet distributed to policyholders soliciting their approval of the plan of demutualization (which plaintiffs claimed violated both the Insurance Law and MONY Life's fiduciary duties). The MONY Group, MONY Life and the New York Superintendent moved to dismiss the state court complaint in its entirety on a variety of grounds. On April 20, 2001, the New York Supreme Court granted both motions and dismissed all claims against the MONY Group, MONY Life and the New York Superintendent. On October 29, 2002, the New York State Appellate Division, First Department affirmed the dismissal of all claims against the MONY Group, MONY Life and the New York Superintendent. On November 8, 2002 plaintiffs filed a Motion with the New York Court of Appeals seeking permission to file an appeal from the Appellate Division's decision. On January 9, 2003, the Court of Appeals denied plaintiffs' motion, thereby concluding the litigation. (ii) In July 2002, pursuant to a jury verdict, the Company was found liable and ordered to pay a former joint venture partner some of the proceeds distributed to the Company from the disposition of a real estate asset in 1999, which was formerly owned by the joint venture. As a result of the verdict, which the Company is appealing, the Company recorded a charge aggregating $13.7 million pre-tax in its results of operations for the quarter ended June 30, 2002. Approximately, $6.8 million of this charge is reflected in the income statement caption entitled "net realized losses" because it represents the return of proceeds originally F-181 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 16. Commitments and Contingencies: (continued) included in the determination of the realized gain recognized by the Company in 1999 upon receipt of the aforementioned distribution. The balance of the charge, which is reflected in the income statement caption entitled "other operating costs and expenses" represents management's best estimate of the interest that the court will require the Company to pay its former joint venture partner, as well as legal costs. (iii) In December 2002 federal securities regulators (SEC) and self-regulatory organizations (NASD) directed all broker-dealers, including the Company, to evaluate their procedures with respect to mutual fund sales charge breakpoints. Management does not believe that the outcome of its evaluation, including any determination it may make with respect to sales charges paid by its customers, will have a material adverse effect on the Company's results of operation, cash flows, or financial position. (iv) It is possible that the results of operations or the cash flow of the Company in a particular quarterly or annual period could be materially affected as a result of the settlement, or re-evaluation of, the matters discussed above. Management believes, however, that the ultimate payments in connection with such matters should not have a material adverse affect on the Company's financial statements. In addition to the matters discussed above, the Company is involved in various other legal actions and proceedings (some of which involve demands for unspecified damages) in connection with its business. In the opinion of management of the Company, resolution of contingent liabilities, income taxes and other matters will not have a material adverse effect on the Company's financial position or results of operations. (v) At December 31, 2002, the Company had commitments to fund the following: $111.0 million of equity partnership investments, $7.5 million private fixed maturity security with an interest rate of 6.83%, $8.8 million of fixed rate agricultural loans with periodic interest rate reset dates with initial rates ranging from 6.25% to 7.37%, $139.6 million fixed and floating rate commercial mortgages with interest rates ranging from 3.93% to 8.36% and $7.4 million of mezzanine financing with pay rates ranging from 8.0% to 10.0%. The Company has entered into various operating lease agreements for office space, furniture and equipment. These leases have remaining non-cancelable lease terms in excess of one year. Total rental expense for these operating leases amounted to $46.1 million in 2002, $46.5 million in 2001, and $29.7 million in 2000. The future minimum rental obligations for the next five years and thereafter under these leases are: $45.3 million for 2003, $39.7 million for 2004, $35.4 million for 2005, $31.4 million for 2006, $28.0 million for 2007, and $119.1 million for the years thereafter. In 1988, the Company financed one of its real estate properties under a sale/leaseback arrangement with the proceeds received from the sale, amortized into income over the life of the lease. The lease has a term of 20 years beginning December 21, 1988 and requires minimum annual rental payments of $7.7 million in 2003, $7.9 million in 2004, $8.0 million in 2005, $8.2 million in 2006, $8.4 million for 2007 and $8.5 million for 2007. The Company has the option to renew the lease at the end of the lease term. 17. StatutoryFinancial Information and Regulatory Risk-Based Capital: The combined statutory net income (loss) reported by the Company for the years ended December 31, 2002, 2001, and 2000 was $(83.5) million, $(30.2) million, and $199.3 million, respectively. The combined statutory surplus of the Company as of December 31, 2002 and 2001 was $906.4 million and $917.4 million, respectively. Each of MONY Life and MLOA exceeds the minimum risk based capital requirements imposed by their respective state of domicile. F-182 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 18. Closed Block -- Summary Financial Information: Summarized financial information of the Closed Block as of and for the years ended December 31, 2002 and 2001 is presented below.
December 31, December 31, 2002 2001 ------------ ------------ ($ in millions) Assets: Fixed maturity securities: Available-for-sale, at estimated fair value (amortized cost, $3,873.2 and $3,780.9) $4,160.9 $3,868.9 Mortgage loans on real estate....................................................... 633.6 622.1 Real estate......................................................................... 8.3 -- Other invested assets............................................................... 0.9 6.2 Policy loans........................................................................ 1,119.0 1,144.3 Cash and cash equivalents........................................................... 59.2 56.2 Premiums receivable................................................................. 11.1 12.5 Deferred policy acquisition costs................................................... 430.5 500.6 Other assets........................................................................ 210.5 219.3 -------- -------- Total Closed Block assets.................................................... $6,634.0 $6,430.1 ======== ======== Liabilities: Future policy benefits.............................................................. $6,901.4 $6,869.8 Policyholders' account balances..................................................... 291.6 292.9 Other policyholders' liabilities.................................................... 159.1 162.2 Other liabilities................................................................... 328.0 163.9 -------- -------- Total Closed Block liabilities............................................... $7,680.1 $7,488.8 ======== ========
For the year ended December 31, --------------------- 2002 2001 2000 ------ ------ ------ ($ in millions) Revenues: Premiums............................................ $509.1 $551.4 $582.4 Net investment income............................... 396.5 397.6 395.7 Net realized (losses)/gains on investments.......... (51.4) 6.0 (7.0) Other income........................................ 2.2 2.4 2.2 ------ ------ ------ Total revenues............................... 856.4 957.4 973.3 ------ ------ ------ Benefits and Expenses: Benefits to policyholders........................... 566.8 606.9 620.9 Interest credited to policyholders' account balances 8.6 8.9 8.8 Amortization of deferred policy acquisition costs... 49.1 59.4 60.4 Dividends to policyholders.......................... 185.5 233.1 232.9 Other operating costs and expenses.................. 6.1 7.0 7.5 ------ ------ ------ Total benefits and expenses.................. 816.1 915.3 930.5 ------ ------ ------ Contribution from the Closed Block.................. $ 40.3 $ 42.1 $ 42.8 ====== ====== ======
F-183 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 18. Closed Block -- Summary Financial Information: (continued) The carrying value of the Closed Block fixed maturity securities at December 31, 2002 and 2001 is net of adjustments for impairment of $60.5 million and $10.9 million, respectively. At December 31, 2002 and 2001, there were $0.6 million and $0.0 million of fixed maturity securities which have been non-income producing for the twelve months preceding such dates. At December 31, 2002 and 2001, there were problem fixed maturity securities of $123.3 million and $6.5 million, respectively. At December 31, 2002 and 2001, there were potential problem fixed maturity securities of $0.0 million and $3.2 million, respectively. There were no fixed maturity securities which were restructured at December 31, 2002 and 2001. The amortized cost and estimated fair value of fixed maturity securities in the Closed Block, by contractual maturity dates, excluding scheduled sinking funds, as of December 31, 2002 are as follows:
Amortized Estimated Cost Fair Value --------- ---------- ($ in millions) Due in one year or less............... $ 363.5 $ 366.6 Due after one year through five years. 1,004.4 1,082.7 Due after five years through ten years 1,412.2 1,541.3 Due after ten years................... 584.7 633.1 -------- -------- Subtotal....................... 3,364.8 3,623.7 Mortgage and asset backed securities.. 508.4 537.2 -------- -------- $3,873.2 $4,160.9 ======== ========
Fixed maturity securities that are not due at a single maturity date have been included in the preceding table in the year of final maturity. Actual maturity dates may differ from contractual maturity dates because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage loans on real estate in the Closed Block at December 31, 2002 and 2001 consist of the following:
2002 2001 ------ ------ ($ in millions) Commercial mortgage loans.................. $599.4 $594.2 Agricultural and other loans............... 42.7 40.2 ------ ------ Subtotal................................... 642.1 634.4 Less: valuation allowances................. (8.6) (12.3) ------ ------ Mortgage loans, net of valuation allowances $633.5 $622.1 ====== ======
An analysis of the valuation allowances for the years ended December 31, 2002 and 2001 is as follows:
2002 2001 ----- ----- ($ in millions) Beginning balance................................. $12.3 $14.8 Increase/(decrease) in allowance.................. 0.8 (2.4) Reduction due to pay downs, payoffs, and writeoffs (1.3) (0.1) Transfer to Real Estate -- Forclosures............ (3.2) -- ----- ----- Valuation Allowances.............................. $ 8.6 $12.3 ===== =====
F-184 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 18. Closed Block -- Summary Financial Information: (continued) Impaired mortgage loans along with related valuation allowances as of December 31, 2002 and 2001 were as follows:
2002 2001 ------ ------ ($ in millions) Investment in impaired mortgage loans (before valuation allowances): Loans that have valuation allowances................................ $ 47.4 $ 64.3 Loans that do not have valuation allowances......................... 73.2 35.5 ------ ------ Subtotal..................................................... 120.6 99.8 Valuation allowances................................................ (10.7) (13.5) ------ ------ Impaired mortgage loans, net of valuation allowances................ $109.9 $ 86.3 ====== ======
For the year ended December 31, 2002, the Closed Block recognized $9.9 million of interest income on impaired loans. For the year ended December 31, 2001 the Closed Block recognized $8.4 million of interest income on impaired loans. At December 31, 2002 and 2001, there were $0.1 million and no mortgage loans in the Closed Block which were non-income producing for the twelve months preceding such dates. At December 31, 2002 and 2001, the Closed Block had restructured mortgage loans of $8.5 million and $12.2 million, respectively. Interest income of $0.6 million and $0.9 million was recognized on such loans for the year ended December 31, 2002 and 2001, respectively. Gross interest income on these loans that would have been recorded in accordance with the original terms of such loans amounted to approximately $1.0 million and $1.3 million for the respective periods. The pre-tax Contribution from the Closed Block includes only those revenues, benefit payments, dividends, premium taxes, state guaranty fund assessments, and investment expenses considered in funding the Closed Block. However, many expenses associated with operating the Closed Block and administering the policies included therein were excluded from and, accordingly, are not funded in the Closed Block. These expenses are reported in the Company's statement of income and comprehensive income, outside of the Contribution from the Closed Block, consistent with how they are funded. Such expenses are reported in the separate line items to which they apply based on the nature of such expenses. Federal income taxes applicable to the Closed Block, which are funded in the Closed Block, are reflected as a component of federal income tax expense in the Company's statement of income and comprehensive income. Since many expenses related to the Closed Block are funded outside the Closed Block, operating costs and expenses outside the Closed Block are disproportionate to the level of business outside the Closed Block. 19. The Closed Block Business: The Closed Block Business ("CBB") is comprised of certain amounts within MONY Holdings and MONY Life. Within MONY Holdings, the Closed Block Business includes: (i) the Insured Notes, (ii) the capitalized costs of issuing the Insured Notes, (iii) the DSCA Sub-account CBB (see Note 20), (iv) the Swap, and (v) the Insurance Policy (see Note 1). Within MONY Life, the Closed Block Business includes: (i) the Closed Block discussed in Notes 2 and 18, and (ii) an amount of capital (hereafter referred to as "Surplus and Related Assets") outside the Closed Block, but within MONY Life, that when aggregated with the assets and liabilities in the Closed Block results in an aggregate carrying value of assets in the Closed Block Business within MONY Life in excess of the carrying value of the liabilities in the Closed Block Business within MONY Life. The amount by which the assets in the Closed Block Business within MONY Life exceed the liabilities in the Closed Block Business within MONY Life represents a sufficient amount of capital based on regulatory standards to support the Closed Block Business within MONY Life. All business of MONY Holdings and subsidiary other than the Closed Block Business is defined in the note indenture as the Ongoing Business ("OB"). The determination of the amount of Surplus and Related Assets was based on Statutory Accounting Practices as required by the note indenture. As the Closed Block's results of operations emerge an equal amount of the Surplus and Related Assets is intended to become available to the Ongoing Business. The investment of the Surplus and Related Assets is restricted to permitted investments and subject to certain concentration limitations as outlined in the Insured Note indenture (see Note 1). F-185 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 19. The Closed Block Business: (continued) The following tables set forth certain summarized financial information attributable to the Ongoing Business and the Closed Block Business of MONY Holdings and its subsidiary, MONY Life, as of and for the year ended December 31, 2002:
As of December 31, 2002 ------------------------------- Closed Ongoing Block Business Business(1) Total --------- ----------- --------- ($ in millions) Assets: Fixed maturity securities available for sale, at estimated fair value $ 2,248.4 $5,579.8 $ 7,828.2 Equity securities available for sale, at estimated fair value........ 247.7 -- 247.7 Mortgage loans on real restate....................................... 927.0 950.4 1,877.4 Other invested assets................................................ 281.7 22.7 304.4 Policy loans......................................................... 93.5 1,119.0 1,212.5 Debt service coverage account -- OB.................................. 64.7 -- 64.7 Debt service coverage account -- CBB................................. -- 9.4 9.4 Cash and cash equivalents............................................ 128.7 95.0 223.7 Accrued investment income............................................ 54.3 149.7 204.0 Amounts due from reinsurers.......................................... 602.5 92.7 695.2 Deferred policy acquisition costs.................................... 795.9 430.5 1,226.4 Other assets......................................................... 575.5 17.7 593.2 Separate account assets.............................................. 4,140.6 -- 4,140.6 --------- -------- --------- Total assets.................................................. $10,160.5 $8,466.9 $18,627.4 ========= ======== ========= Liabilities: Future policy benefits............................................... $ 1,048.5 $6,901.4 $ 7,949.9 Policyholders' account balances...................................... 2,488.1 291.6 2,779.7 Other policyholders' liabilities..................................... 130.1 159.1 289.2 Other liabilities.................................................... 810.3 421.2 1,231.5 Long term debt....................................................... 217.5 300.0 517.5 Separate account liabilities......................................... 4,137.6 -- 4,137.6 --------- -------- --------- Total liabilities............................................. $ 8,832.1 $8,073.3 $16,905.4 ========= ======== =========
---------- (1)Includes the assets and liabilities of MONY Holdings as of December 31, 2002. F-186 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 19. The Closed Block Business: (continued)
For the Year Ended December 31, 2002 ----------------------------- Closed Ongoing Block Business Business(1) Total -------- ----------- -------- ($ in millions) Revenues: Premiums........................................................ $181.3 $509.1 $ 690.4 Universal life and investment-type product policy fees.......... 200.5 -- 200.5 Net investment income........................................... 247.0 480.1 727.1 Net realized losses on investments.............................. (76.8) (74.2) (151.0) Group Pension Profits........................................... 82.3 -- 82.3 Other income.................................................... 167.0 2.3 169.3 ------ ------ -------- Total revenues........................................... 801.3 917.3 1,718.6 ------ ------ -------- Benefits and Expenses: Benefits to policyholders....................................... 236.3 566.8 803.1 Interest credited to policyholders' account balances............ 110.7 8.6 119.3 Amortization of deferred policy acquisition cost................ 107.0 49.1 156.1 Dividends to policyholders...................................... 2.5 185.5 188.0 Other operating costs and expenses.............................. 393.4 81.4 474.8 ------ ------ -------- Total benefits and expenses.............................. 849.9 891.4 1,741.3 ------ ------ -------- Net (loss) income from continuing operations before income taxes $(48.6) $ 25.9 $ (22.7) ====== ====== ========
---------- (1)Includes: (i) revenues and expenses associated with the DSCA, the Insured Notes, and the Swap for the period from April 30, 2002 (the date of MONY Holdings' commencement of operations) through December 31, 2002, (ii) the net contribution to income from the Surplus and Related Assets from April 30, 2002 (the date of MONY Holdings' commencement of operations) through December 31, 2002, and (iii) the results of operations from the Closed Block from January 1, 2002 through December 31, 2002. The statutory surplus of MONY Life as of December 31, 2002 was $906.4 million, of which $555.6 million was attributable to the Ongoing Business and $350.8 million was attributable to the Closed Block Business. Statutory net gain from operations of MONY Life for the year ended December 31, 2002 was $154.6 million, of which $59.3 million was attributable to the Ongoing Business and $95.3 million was attributable to the Closed Block Business. The net gain from operations attributable to the Closed Block Business includes: (i) the net contribution to income from the Surplus and Related Assets from April 30, 2002 (the date of commencement of operations of the Closed Block Business) through December 31, 2002, and (ii) the results of operations from the Closed Block from January 1, 2002 through December 31, 2002. 20. The Insured Notes: Dividends from MONY Life are the principal source of cash inflow, which will enable MONY Holdings to meet its obligations under the Insured Notes. The ability of MONY Life to declare and pay MONY Holdings a dividend is governed by the Insurance Law of the State of New York. The Insurance Law of the State of New York permits a stock life insurance company to pay dividends each calendar year, without the prior approval of the superintendent of the insurance department, in an amount equal to the lesser of (a) ten percent of its "policyholders' surplus" as of the end of the preceding calendar year or (b) the company's "net gain from operations" for the preceding calendar year (not including realized capital gains), as determined in accordance with Statutory Accounting Practices prescribed or permitted by the Insurance Department of the State of New York (hereafter referred to as the "NY Dividend Statute"). Under the New York State Insurance Law, the maximum allowable dividend from MONY Life to its shareholder in 2003 without regulatory approval is $90.6 million. F-187 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 20. The Insured Notes: (continued) In addition, pursuant to the Note indenture, dividends to MONY Holdings from MONY Life are required to be allocated between the Ongoing Business and the Closed Block Business. This allocation, while principally based on separately applying the NY Dividend Statute to the "policyholders' surplus" and "net gain from operations" attributable to the Ongoing Business and the Closed Block Business, is subject to certain adjustments described in the Note indenture. The amount of the dividend attributable to the Closed Block Business is required to be deposited in the Debt Service Coverage Account -- Subaccount CBB. As described in the Note indenture, the amount of the dividend deposited in the Debt Service Coverage Account -- Subaccount CBB will not generally be available for dividend to the MONY Group until all the obligations to pay principal, interest and other amounts on the Insured Notes are fully extinguished. Under limited circumstances, if the fair value of the Debt Service Coverage Account exceeds amounts set forth in the Note indenture, such excess can become available earlier for dividend to the MONY Group. The amount of such dividend attributable to the Ongoing Business will generally be available to MONY Holdings to pay dividends to the MONY Group. See Note 1 for additional information regarding the Insured Notes. 21. Goodwill and Other Intangible Assets -- Adoption of Statement 142 In accordance with the adoption of SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS 142") goodwill is periodically tested for impairment and is no longer amortized. The following tables set forth the impact of the adoption of SFAS 142 on the Company's net income for years ended December 31, 2002, 2001and 2000. In addition, as required by SFAS 142, management tested the carrying value of the Company's goodwill at December 31, 2002 and determined that no impairment exists.
For the Year Ended December 31, --------------------- 2002 2001 2000 ----- ------ ------ ($ in millions) Reported net (loss) income..... $(5.6) $(34.0) $226.3 Add back: Goodwill amortization -- 1.3 1.3 ----- ------ ------ Adjusted net (loss) income..... $(5.6) $ 32.7 $227.6 ===== ====== ======
The goodwill amortization recorded for the years ended December 31, 2001 and 200 was included in the Protection Products and Other Products segments as follows:
For the Year Ended December 31, ------------------ 2001 2000 ---- ---- ($ in millions) Protection Products $1.1 $1.1 Other Products..... 0.2 0.2 ---- ---- Total....... $1.3 $1.3 ==== ====
The following table summarizes the significant components of goodwill, and the related amortization by segment for the periods presented.
2002 2001 ------------------ ----------------- Protection Other Protection Other Segment Segment Segment Segment ---------- ------- ---------- ------- ($ in millions) Beginning Balance $17.9 $1.3 $19.0 $ 1.5 Amortization..... -- -- (1.1) (0.2) ----- ---- ----- ----- Ending Balance... $17.9 $1.3 $17.9 $ 1.3 ===== ==== ===== =====
F-188 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 22. Reorganization and Other Charges: During the fourth quarter of 2002 and 2001, the Company recorded Reorganization and Other charges aggregating approximately $7.2 million and $144.4 million, respectively. Of these charges, $7.2 million and $19.1 million, respectively, met the definition of "restructure charges" as defined by Emerging Issues Task Force Consensus 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". The 2002 restructure charge consisted of severance and related benefits resulting from headcount reductions of 161 and 26, respectively, in the Company's home office and career agency system, as well as losses from the abandonment of certain leased offices and equipment. The 2001 restructure charge consisted of severance and related benefits of $10.3 million resulting from headcount reductions of 117 and 240, in the Company's home office and career agency system, respectively, and $8.7 million of other miscellaneous items. The balance of the charge in 2001, $125.4 million, was unrelated to the Company's restructure activities and consisted of: (i) impairments of certain invested assets and valuation related write-downs of private equity securities held in the Company's equity method venture capital portfolio; (ii) the write-off of deferred sales charges in the Company's mutual fund business to reflect revised estimates of recoverability which are principally due to the decline in the value of the Company's internet funds; (iii) write-downs of certain information technology assets; and (iv) other miscellaneous items. The following tables summarize the components of the aforementioned charges recorded during 2002 and 2001, respectively. None of the charges referred to below as "Reorganization Charges" have been allocated to the Company's operating segments, however, the charges in 2001 referred to as "Other Charges" have been allocated to the Company's operating segments. All Reorganization Charges incurred in 2002 and 2001 are reported as reconciling items. 2002:
Net Realized Operating Losses Total --------- ------------ ----- ($ in millions) Reorganization Charges (1): Severance benefits and incentive compensation $6.1 $-- $6.1 Leased offices and equipment................. 1.1 -- 1.1 ---- --- ---- Total Reorganization Charges before tax...... $7.2 $-- $7.2 ==== === ==== Total Reorganization Charges after tax....... $4.7 $-- $4.7 ==== === ====
---------- (1)All of the reorganization charges recorded in 2002 meet the definition of "restructuring charges" as defined by EITF 94-3. F-189 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 22. Reorganization and Other Charges: (continued) 2001:
Net Realized Operating Losses Total --------- ------------ ------ ($ in millions) Reorganization Charges: Severance benefits and incentive compensation................... $ 22.8 $ -- $ 22.8 Leased offices and equipment.................................... 8.7 -- 8.7 Deferred policy acquisition costs............................... 17.0 -- 17.0 Other........................................................... 8.3 -- 8.3 ------ ----- ------ Subtotal -- Reorganization Charges....................... 56.8 -- 56.8 Other Charges: Asset Impairments and Valuation Related Write-downs............. 29.9 20.1 50.0 Deferred Sales Charges.......................................... 7.0 -- 7.0 Information technology assets................................... 9.4 -- 9.4 Other........................................................... 21.2 -- 21.2 ------ ----- ------ Subtotal -- Other Charges................................ 67.5 20.1 87.6 ------ ----- ------ Total -- Reorganization and Other Charges before tax..... $124.3 $20.1 $144.4 ====== ===== ====== Total -- Reorganization and Other Charges after tax...... $ 80.8 $13.1 $ 93.9 ====== ===== ======
All charges referred to as Reorganization Charges included in the table above, except $17.0 million related to deferred policy acquisition costs in 2001 and $5.3 million related to investment expenses in 2001, are included in "Other operating costs and expenses" in the Company's 2001 consolidated income statement. The following table indicates the line items in the Company's consolidated and segmented income statements for the year ended December 31, 2001 that the Other Charges in the table above are reflected in. In addition, all of the reorganization charges are reflected in reconciling in the table as discussed above.
Protection Accumulation Other Reconciling Total ---------- ------------ ----- ----------- ------ ($ in millions) Premiums......................................... $ 1.0 $ -- $ -- $ -- $ 1.0 Net investment income............................ 20.3 3.8 3.3 5.3 32.7 Group pension profit............................. 2.5 -- -- -- 2.5 Benefits to policyholders........................ 1.8 3.9 -- -- 5.7 Amortization of deferred policy acquisition costs -- 2.0 -- 17.0 19.0 Other operating costs and expenses............... 17.6 10.3 1.0 34.5 63.4 ----- ----- ---- ----- ------ Total Other Operating Charges.................... 43.2 20.0 4.3 56.8 124.3 Net realized losses on investments............... 14.9 2.8 2.4 -- 20.1 ----- ----- ---- ----- ------ Total Other Charges....................... $58.1 $22.8 $6.7 $56.8 $144.4 ===== ===== ==== ===== ======
F-190 MONY LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) 22. Reorganization and Other Charges: (continued) Set forth below is certain information regarding the liability recorded in connection with the Company's restructuring actions during 2002 and 2001, as well as the changes therein. Such liability is reflected in accounts payable and other liabilities on the Company's consolidated balance sheet.
Change in December 31, Cash Reserve December 31, 2001 Charges Payments Estimates 2002 ------------ ------- -------- --------- ------------ ($ in millions) Restructuring Charges Liability: Severance benefits............................... $ 8.1 $6.1 $(5.4) $(1.0) $ 7.8 Other restructure charges........................ 4.5 1.1 (1.2) -- 4.4 ----- ---- ----- ----- ----- Total Restructuring Charges Liability..... $12.6 $7.2 $(6.6) $(1.0) $12.2 ===== ==== ===== ===== =====
23. Implications of the Events of September 11th: The terrorist events of September 11th had no material effect on the Company's financial position at December 31, 2001 or its results of operations for the year then ended. The net effect of life insurance claims relating to the incident (after reinsurance and the release of related policy reserves) aggregated approximately $3.9 million pre-tax. In addition, the Company incurred damages from the interruption of certain of its business operations. These damages principally consist of: (i) lost revenues at MSC and Enterprise resulting from the close of the New York securities markets, (ii) the temporary closing of the Company's New York corporate offices, and (iii) lost revenues resulting from the volatility of the securities markets and consumer uncertainty with respect to equity based products in the aftermath of September 11, 2001. To date, no determination has been made with respect to the Company's ability to recover the aforementioned damages under its insurance coverage. To date, the Company has recovered $0.3 million relating to the aforementioned damages under its insurance coverage. 24. Subsequent Events (Unaudited): During 2002, MONY Holdings commenced activities to register the Insured Notes with the SEC as provided for under the note indenture. On February 14, 2003, the SEC declared such registration effective. In March 2003, litigation relating to the disposition of a real estate asset as discussed in Note 16 (ii) was settled for approximately $4.0 million less than the provision previously recorded. Accordingly, during the first quarter of 2003 the Company will reverse such over-accrual to income. F-191 PART C OTHER INFORMATION Item 27. Exhibits 1.Board of Directors Resolution a)Resolution of the Board of Trustees of The Mutual Life Insurance Company of New York authorizing establishment of MONY Variable Account L (1) 2.Custodian Agreements. Not Applicable. 3.Underwriting Contracts. a)Underwriting Agreement between The Mutual Life Insurance Company of New York, MONY Series Fund, Inc. and MONY Securities Corp. (2) b)Proposed specimen agreement between MONY Securities Corp. and registered representatives (3) c)Specimen commission schedule (Career Contract Schedule) (5) 4.Contracts. a)Specimen form of policy (6) b)Form of Term Life Term Rider (4) c)Form of Spouse's Yearly Renewable Term Rider (4) d)Form of Purchase Option Rider (4) e)Form of Waiver of Monthly Deduction Rider (4) f)Form of Children's Term Life Insurance Rider (4) 5.Applications. a)Specimen application form for Flexible Premium Variable Universal Life Insurance Policy (6) 6.Depositor's Certificate of Incorporation and By-Laws. a)Amended and Restated Charter and Amended and Restated By-Laws of MONY Life Insurance Company (7) 7.Reinsurance Contracts. (8) a)Automatic Bulk YRT Non-Refund Agreement among MONY life insurance Company, MONY Life Insurance Company of America and Allianz Life Insurance company of North America 8.Participation Agreements. a)Participation Agreement among The Alger American Fund, MONY Life Insurance Company and MONY Life Insurance Company of America (9) b)Participation Agreement among Enterprise Accumulation Trust, MONY Life Insurance Company of America and MONY Life Insurance Company (10) c)Participation Agreement among INVESCO Variable Investment Funds, Inc., MONY Life Insurance Company and MONY Life Insurance Company of America (9) d)Participation Agreement among Janus Aspen Series, MONY Life Insurance Company and MONY Life Insurance Company of America (9) e)Participation Agreement among Lord Abbett Series Fund, MONY Life Insurance Company and MONY Life Insurance Company of America (9) C-1 f)Participation Agreement among MFS Variable Insurance Trust, MONY Life Insurance Company and MONY Life Insurance Company of America (9) g)Participation Agreement among PBHG Insurance Series Fund, MONY Life Insurance Company and MONY Life Insurance Company of America (11) (i)Amended Participation Agreement between PBHG Insurance Series Fund and MONY Life Insurance Company (11) h)Participation Agreement among PIMCO Variable Insurance Trust, MONY Life Insurance Company and MONY Life Insurance Company of America (9) i)Participation Agreement among The Universal Institutional Funds, Inc., MONY Life Insurance Company and MONY Life Insurance Company of America (9) 9.Administrative Contracts. a)Services Agreement between The Mutual Life Insurance Company of New York and MONY Life Insurance Company of America (3) 10. Other Material Contracts. 11.Legal Opinion. a)Opinion and consent of Arthur D. Woods, Esq. (11) b)Opinion and consent of Robert Levy, Esq. (11) 12.Actuarial Opinion. a)Opinion and consent of Pamela Duffy (11) 13.Calculations. (11) 14.Other Opinions. a)Consent of PricewaterhouseCoopers LLP (11) 15.Omitted Financial Statements. No financial statements are omitted from Item 24. 16.Initial Capital Agreements. Not Applicable. 17.Redeemability Exemption. (11) 18.Powers of Attorney. (4) a)Power of Attorney for Michael I. Roth, Director, Chairman of the Board and Chief Executive Officer (Principal Executive Officer) b)Power of Attorney for Samuel J. Foti, Director, President, and Chief Operating Officer c)Power of Attorney for Kenneth M. Levine, Director and Executive Vice President d)Power of Attorney for Richard Daddario, Executive Vice President and Chief Financial Officer e)Power of Attorney for Tom H. Barrett, Director f)Power of Attorney for David L. Call, Director g)Power of Attorney for G. Robert Durham, Director h)Power of Attorney for James B. Farley, Director i)Power of Attorney for Robert Holland, Jr., Director j)Power of Attorney for James L. Johnson, Director C-2 k)Power of Attorney for Frederick W. Kanner, Director l)Power of Attorney for Robert R. Kiley, Director m)Power of Attorney for Jane C. Pfeiffer, Director n)Power of Attorney for Thomas C. Theobald, Director o)Power of Attorney for David M. Thomas, Director ---------- (1)Incorporated herein by reference to pre-effective amendment no. 1 to the registration statement on Form S-6 (File No. 33-37719) filed on December 17, 1990. (2)Incorporated herein by reference to the registration statement on Form S-6 (File No. 33-37719) filed on November 9, 1990. (3)Incorporated herein by reference to post-effective amendment no. 22 to the registration statement on Form N-6 (File No. 333-06071) filed on April 30, 2003. (4)Incorporated herein by reference to post-effective amendment no. 3 to the registration statement on Form N-6 (File No. 333-72590) filed on March 3, 2003. (5)Incorporated herein by reference to pre-effective amendment no. 1 to registration statement on Form S-6 (File No. 333-72596) filed on December 7, 2001. (6)Incorporated herein by reference to pre-effective amendment no. 1 to the registration statement on Form S-6 (File No. 333-72590) filed on December 7, 2001. (7)Incorporated herein by reference to the initial registration statement on Form S-6 (File No. 333-71417) filed on January 29, 1999. (8)Incorporated herein by reference to post-effective amendment no. 4 to the registration statement on Form N-6 (File No. 333-72596) filed on April 30, 2003. (9)Incorporated herein by reference to pre-effective amendment no. 1 to the registration statement on Form N-4 (File No. 333-92320) filed on September 17, 2002. (10)Incorporated herein by reference to post-effective amendment no. 7 to the registration statement on Form N-4 (File No. 333-72259) filed on April 18, 2001. (11)Filed herewith. Item 28. Directors and Officers of the Depositor
Name and Principal Business Address* Position and Offices with Depositor ------------------------------------ ------------------------------------------------------------ Michael I. Roth............ Director, Chairman of the Board and Chief Executive Officer Samuel J. Foti............. Director, President and Chief Operating Officer Kenneth M. Levine.......... Director, Executive Vice President and Chief Investment Officer Richard Daddario........... Executive Vice President and Chief Financial Officer Steven G. Orluck........... Executive Vice President Richard E. Connors......... Senior Vice President Evelyn L. Peos............. Senior Vice President Bart Schwartz.............. Senior Vice President and General Counsel Michael Slipowitz.......... Senior Vice President and Chief Actuary Arnold Brousell............ Vice President-Financial Reporting and Chief Accounting Officer David V. Weigel............ Vice President and Treasurer Lee M. Smith............... Corporate Secretary and Vice President, Government Relations
---------- * Principal business address is c/o MONY Life Insurance Company, 1740 Broadway, New York, New York, 10019. C-3 Item 29. Persons Controlled by or Under Common Control with the Depositor or the Registrant. No person is directly or indirectly controlled by the Registrant. The Registrant is a separate account of MONY Life Insurance Company. The following is a table showing all corporations directly or indirectly controlled by or under common control with MONY Life Insurance Company, showing the state or other sovereign power under the laws of which each is organized and the percentage ownership of voting securities giving rise to the control relationship.
Percent of Voting Name Jurisdiction Securities Owned Principal Business ---- ------------- --------------------------- ------------------------- The MONY Group Inc. Delaware Insurance Holding Company MONY Life Insurance New York 100% owned by The MONY Insurance Company Group Inc The Advest Group, Inc. Delaware 100% owned by The MONY Life Insurance Group Inc. Lebenthal & Co., Inc. New York 100% indirectly owned by Securities Municipal Securities The MONY Group Inc. MONY Life Insurance Arizona 100% indirectly owned by Life Insurance Company of America The MONY Group Inc. Sagamore Financial Ohio 100% indirectly owned by Insurance Holding Company Corporation The MONY Group Inc. Matrix Capital Markets Group, Virginia 100% owned by The MONY Business Brokerage Inc. Group Inc. PCP Benefit Plans, Ltd. New York 100% owned by The MONY Insurance Group Inc. MONY Series Fund, Inc. Maryland 100% owned by The MONY Mutual Funds Group Inc. Enterprise Accumulation Trust Massachusetts 100% indirectly owned by Mutual Funds The MONY Group Inc. U.S. Financial Life Insurance Ohio 100% indirectly owned by Insurance Company The MONY Group Inc. Financial Marketing Agency, Ohio 99% indirectly owned by The Insurance Distribution Inc. MONY Group Inc. Matrix Private Equities, Inc. Virginia 100% owned by The MONY Investments Group Inc. MONY International Holdings, Delaware 100% indirectly owned by Holding Company Inc. The MONY Group Inc. MONY Asset Management, Delaware 100% indirectly owned by Investments Inc. The MONY Group Inc. MONY Capital Management, Delaware 100% indirectly owned by Investments Inc. The MONY Group Inc. MONY Agricultural Investment Delaware 100% indirectly owned by Agricultural Investment Advisers, Inc. The MONY Group Inc. MONY Realty Capital, Inc. Delaware 100% indirectly owned by Real Estate The MONY Group Inc. MONY Life Insurance Cayman 100% indirectly owned by Life Insurance Company of the Americas, Islands The MONY Group Inc. Ltd
C-4
Percent of Voting Name Jurisdiction Securities Owned Principal Business ---- ------------- ------------------------ ------------------------ MONY Bank & Trust Cayman 100% indirectly owned by Banking Company of the Americas, Islands The MONY Group Inc. Ltd MONY Consultoria e Brazil 100% indirectly owned by Insurance Corretagem de Seguros Ltda. The MONY Group Inc. MONY International Life Argentina 100% indirectly owned by Insurance Insurance Co. Seguros de The MONY Group Inc. Vida S.A. MONY Securities Corporation New York 100% indirectly owned by Broker-Dealer The MONY Group Inc. 1740 Advisers, Inc. New York 100% indirectly owned by Investments The MONY Group Inc. MONY Assets Corp. New York 100% indirectly owned by Investments The MONY Group Inc. Enterprise Capital Georgia 100% indirectly owned by Mutual Fund Management, Inc. The MONY Group Inc. MONY Realty Partners, Inc. Delaware 100% indirectly owned by Real Estate The MONY Group Inc. 1740 Ventures, Inc. New York 100% indirectly owned by Investments The MONY Group Inc. MONY Brokerage, Inc. Delaware 100% indirectly owned by Insurance Distributor The MONY Group Inc. Trusted Investment Advisors Minnesota 100% indirectly owned by Broker-Dealer Corp. The MONY Group Inc. Trusted Insurance Advisors Minnesota 100% indirectly owned by Insurance Agency General Agency Corp. The MONY Group Inc. Trusted Securities Advisors Minnesota 100% indirectly owned by Broker-Dealer Corp. The MONY Group Inc. MONY Benefits Management Delaware 100% indirectly owned by Benefits Manager Corp The MONY Group Inc. Enterprise Fund Distributors, Delaware 100% indirectly owned by Mutual Fund Distributors Inc. The MONY Group Inc. Trusted Advisors Insurance Massachusetts 100% indirectly owned by Insurance Agency, Inc. The MONY Group Inc. MONY Benefits Service Corp. Delaware 100% indirectly owned by Plan Administration The MONY Group Inc. MBI Insurance Agency of Alabama 100% indirectly owned by Insurance Distribution Alabama, Inc. The MONY Group Inc. MBI Insurance Agency of Ohio 100% indirectly owned by Insurance Distribution Ohio, Inc. The MONY Group Inc. MBI Insurance Agency of Massachusetts 100% indirectly owned by Insurance Distribution Massachusetts, Inc. The MONY Group Inc. MBI Insurance Agency of Texas 100% indirectly owned by Insurance Distribution Texas, Inc. The MONY Group Inc. MBI Insurance Agency of New New Mexico 100% indirectly owned by Insurance Distribution Mexico, Inc. The MONY Group Inc. MBI Insurance Agency of Washington 100% indirectly owned by Insurance Distribution Washington, Inc. The MONY Group Inc.
C-5 Item 30. Indemnification Article XV of MONY Life Insurance Company's Amended and Restated By-Laws provides, in part: Each person (and the heirs, executors and administrators of such person) made or threatened to be made a party to any action, civil or criminal, by reason of being or having been a director, officer, or employee of the corporation (or by reason of serving any other organization at the request of the corporation) shall be indemnified to the extent permitted by the law of the State of New York and in the manner prescribed therein. To this end, and as authorized by Section 722 of the Business Corporation Law of the State of New York, the Board may adopt all resolutions, authorize all agreements and take all actions with respect to the indemnification of directors and officers, and the advance payment of their expenses in connection therewith. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification for such liabilities (other than the payment by the Registrant of expense incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant, will (unless in the opinion of its counsel the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 31. Principal Underwriter a) Other Activity. MONY Securities Corporation ("MSC") is the principal underwriter of the Policies as defined in the Investment Company Act of 1940, as amended. MSC also acts as principal underwriter for MONY America Variable Account A, L, and S of MONY Life Insurance Company of America and for MONY Variable Account A, L, and S of MONY Life Insurance Company. (b) Management. The following information is furnished with respect to the officers and directors of MSC:
Name and Principal Positions and Offices Business Address* Positions and Offices with MSC with Depositor ------------------ ---------------------------------------- --------------------- Victor Ugolyn....... Director and Chairman of the Board Phillip D'Ambrisi... Director, President and Chief Executive Officer Christopher Adirente Director Charles P. Leone.... Director John M. Purcell..... Senior Vice President - Marketing Tara L. Eirich...... Senior Vice President - Operations John C. Norton...... Senior Vice President - Chief Compliance Officer Alexandra J. Romero. Vice President - Compliance James N. Gould...... Vice President Jeffrey M. Harrison. Vice President Arthur D. Woods..... Secretary Vice President - Variable Products and Broker-Dealer Operations Counsel Tamara L. Bronson... Treasurer Timothy Looney...... Financial Principal
---------- * Principal business address is c/o MONY Life Insurance Company, 1740 Broadway, New York, New York 10019. C-6 c) Compensation From the Registrant. The following commissions and other compensation were received by each principal underwriter, directly or indirectly, from the Registrant during the Registrant's last fiscal year:
(1) (2) Name of Net Underwriting (3) (4) Principal Discounts and Compensation on Brokerage (5) Underwriter Commissions Redemption Commissions Compensation ----------- ---------------- --------------- ----------- ------------ MSC $14,206,789 0 N/A N/A
Item 32. Location of Accounts and Records All accounts and records required to be maintained by Section 31(a) of the Investment Company Act of 1940, as amended, and the rules thereunder are maintained by MONY Life Insurance Company, 1740 Broadway, New York, New York 10019 or at its Operations Center at 1 MONY Plaza, Syracuse, New York 13221. Item 33. Management Services All management contracts are discussed in Part A or Part B. Item 34. Fee Representation MONY Life Insurance Company hereby represents that the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by MONY Life Insurance Company. C-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, MONY Variable Account L and MONY Life Insurance Company certify that they meet all the requirements for effectiveness of this Registration Statement under Rule 485(b) of the Securities Act of 1933 and have duly caused Post-Effective Amendment No. 4 to this Registration Statement to be signed on their behalf by the undersigned, duly authorized, in the City of New York and the State of New York, on this 29th day of April, 2003. MONY VARIABLE ACCOUNT L (Registrant) By: * ----------------------------- Michael I. Roth, Director, Chairman of the Board, and Chief Executive Officer of MONY Life Insurance Company MONY LIFE INSURANCE COMPANY (Depositor) By: * ----------------------------- Michael I. Roth, Director, Chairman of the Board, and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on April 29th , 2003. Signature Title --------- ----- * Director, Chairman of the Board and ----------------- Chief Executive Officer Michael I. Roth (Principal Executive Officer) * Director, President, and Chief ----------------- Operating Officer Samuel J. Foti * Director and Executive Vice President ----------------- Kenneth M. Levine * Executive Vice President and Chief ----------------- Financial Officer Richard Daddario /S/ LEE M. SMITH Corporate Secretary and Vice President, Government ----------------- Relations Lee M. Smith * Director ----------------- Tom H. Barrett * Director ----------------- David L. Call * Director ----------------- G. Robert Durham Signature Title --------- ----- * Director ---------------------------------- James B. Farley * Director ---------------------------------- Robert Holland, Jr. * Director ---------------------------------- James L. Johnson * Director ---------------------------------- Frederick W. Kanner * Director ---------------------------------- Robert R. Kiley * Director ---------------------------------- Jane C. Pfeiffer * Director ---------------------------------- Thomas C. Theobald * Director ---------------------------------- David M. Thomas *By: /s/ Lee M. Smith ---------------------------------- Lee M. Smith, Attorney-in-Fact Pursuant to Power of Attorney 2 EXHIBIT INDEX 8.g) Participation Agreement among PBHG Insurance Series Fund, MONY Life Insurance Company and MONY Life Insurance Company of America 8.g)1. Amendment No. 1 to Fund Participation Agreement 11.a) Opinion and consent of Arthur D. Woods, Esq. 11.b) Opinion and consent of Robert Levy, Esq. 12.a) Opinion and consent of Pamela Duffy 13. Calculations 14.a) Consent of PricewaterhouseCoopers LLP 17. Redeemability Exemption