<PAGE>
MBL VARIABLE CONTRACT ACCOUNT -- 2
To Contract Holders and Participants
The value of a Variable Accumulation Unit of MBL Variable Contract Account -- 2
(the "Account") as of June 30, 1996 was $126.323, an increase of 8.7% from the
value of $116.231 on December 31, 1995. The Standard & Poor's 500 Stock Index, a
generally accepted market index of unmanaged securities, increased 10.1% during
the same period.
The Account invests exclusively in the MBL Growth Fund (the "Fund"). The
accompanying semiannual report of the Fund contains a review, by the Fund's
Investment Adviser, of its overall performance and commentary related to
specific holdings in the Fund's portfolio.
We thank you for your continued confidence in MBL Variable Contract Account --
2. We remain committed to providing you with superior customer service and
quality investment management.
Following are the unaudited financial statements of the Account as of, and for
the period ended, June 30, 1996.
Sincerely,
MBL Life Assurance Corporation
<PAGE>
MBL VARIABLE CONTRACT ACCOUNT -- 2
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in MBL Growth Fund, Inc.
(an investment company) -- 3,365,944 shares
at net asset value of $11.19 per share
(cost -- $38,162,447)................................................... $37,664,910
-----------
Total Assets...................................................... 37,664,910
LIABILITIES
Due to MBL Life -- Note C................................................. 178,577
-----------
Total Liabilities................................................. 178,577
-----------
Net assets................................................................ $37,486,333
-----------
-----------
Net assets attributable to variable annuity
Contract Holders
295,146 variable accumulation units at value
of $126.323 per unit................................................ $37,283,761
Variable annuity reserves -- Note A..................................... 202,572
-----------
$37,486,333
-----------
-----------
</TABLE>
See notes to financial statements.
2
<PAGE>
MBL VARIABLE CONTRACT ACCOUNT -- 2
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Investment expenses -- Note C:
Risk and death benefit charges........................................... $ 68,482
----------
Net investment loss................................................ 68,482
----------
Realized and unrealized gain (loss) on investments -- Note D:
Net realized loss on sales of investments................................ (97,515)
Decrease in unrealized depreciation of investments....................... 3,266,102
----------
Net gain on investments............................................ 3,168,587
----------
Net increase in net assets resulting from operations....................... $3,100,105
----------
----------
</TABLE>
See notes to financial statements.
3
<PAGE>
MBL VARIABLE CONTRACT ACCOUNT -- 2
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1996 1995
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS
Net investment income (loss).............................................. $ (68,482) $ 2,981,651
Net realized loss on sales of investments................................. (97,515) (610,124)
Decrease in unrealized depreciation of investments........................ 3,266,102 6,990,746
-------------- --------------
Net increase in net assets resulting from operations.................... 3,100,105 9,362,273
-------------- --------------
FROM CONTRACT HOLDERS' TRANSACTIONS -- NOTE B
Net purchase payments..................................................... 10,821 --
Accumulation units surrendered............................................ (1,516,947) (2,012,142)
Annuity payments.......................................................... (12,563) (20,662)
-------------- --------------
Decrease in net assets resulting from Contract Holders' transactions.... (1,518,689) (2,032,804)
-------------- --------------
Increase in amount due MBL Life resulting from investment activities and
mortality gains and losses -- Note C.................................... (29,167) (37,635)
-------------- --------------
Net increase in net assets.............................................. 1,552,249 7,291,834
Net assets
Beginning of period....................................................... 35,934,084 28,642,250
-------------- --------------
End of period............................................................. $ 37,486,333 $ 35,934,084
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
4
<PAGE>
MBL VARIABLE CONTRACT ACCOUNT -- 2
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A -- MBL Variable Contract Account -- 2 (the "Account") is a unit
investment trust registered under the Investment Company Act of 1940, as
amended, and a separate account of MBL Life Assurance Corporation ("MBL Life")
established under the Insurance Laws of New Jersey. MBL Life provides for
variable accumulation and benefits under the Account's contract by crediting
annuity considerations to the Account or the Fixed Accumulation Account, as
elected by the participant. Significant accounting policies of the Account are
as follows:
INVESTMENTS -- Investments are valued at net asset value. The Account purchases
shares of MBL Growth Fund, Inc. (the "Fund") at the net asset value of such
shares on the date monies are received. Cost represents the aggregate of such
purchases at the respective net asset values, less shares redeemed at average
cost. The Account recognizes dividend income and capital gain distributions, if
any, on the ex-dividend date as set by the Fund.
VARIABLE ANNUITY RESERVES -- The variable annuity reserves are actuarially
determined on the basis of the 1951 Group Annuity Mortality Tables for Males,
modified, at 3.5%.
FEDERAL INCOME TAXES -- The Account does not provide for Federal income taxes
since the operations of the Account form a part of, and are taxed with, the
total operations of MBL Life, which is taxed as a "life insurance company" under
the Internal Revenue Code. Earnings and realized capital gains of the Account
attributable to the Contract Holders are excluded in the determination of the
Federal income tax liability of MBL Life.
ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates.
NOTE B -- On July 16, 1991, the Superior Court of New Jersey (the "Court")
entered an Order appointing the New Jersey Insurance Commissioner as
Rehabilitator of the Mutual Benefit Life Insurance Company in Rehabilitation
("Mutual Benefit Life"). The Commissioner was granted immediate exclusive
possession and control of, and title to, the business and assets of Mutual
Benefit Life, including the assets and liabilities of the Account. As a separate
account, the assets and liabilities of the Account are maintained separate and
apart from the sponsoring insurance company's other assets and liabilities.
On November 10, 1993, the Court issued an Order of Confirmation which provided
for the implementation of the Third Amended Plan of Rehabilitation of Mutual
Benefit Life (the "Plan"). The Plan, as confirmed, reaffirmed the status of the
Account as a separate account.
On April 29, 1994, the Plan was implemented. Substantially all of the assets and
liabilities of Mutual Benefit Life were transferred to MBL Life. In addition,
the assets and liabilities of the Account were transferred to a new separate
account of MBL Life. Also, as of April 29, 1994, the ownership of the stock of
MBL Life was transferred to a Trust, of which the Commissioner is the sole
Trustee.
5
<PAGE>
NOTE B -- (CONTINUED)
While the terms of the Plan currently prohibit or limit redemptions from the
Fixed Accumulation Account and transfers from the Fixed Accumulation Account to
the Account, annuity payments which commenced prior to July 16, 1991 and any
death benefits payable, both before and after July 16, 1991, are unaffected and
will continue to be paid under the terms of the Plan. In addition, the Plan
permits redemptions of amounts from the Account to continue, as requested, and
transfers from other separate accounts of MBL Life for the purchase of variable
annuities.
NOTE C -- A charge at the annual rate of 0.37% is made daily against Account
assets for mortality and expense risks assumed by MBL Life and for provision of
the guaranteed minimum death benefit. The portion of these charges which are
retained in the Account and are due to MBL Life participate ratably in the
investment performance of the Account.
NOTE D -- Aggregate purchases and proceeds from the sales of investments during
the period ended June 30, 1996 amounted to $80,616 and $1,715,122, respectively.
The net realized loss on sales of investments was calculated as follows:
<TABLE>
<S> <C>
Proceeds from sales of investments.......................... $ 1,715,122
Cost of investments sold.................................... 1,812,637
-----------
Net realized loss on investments.......................... $ (97,515)
-----------
-----------
</TABLE>
The decrease in unrealized depreciation of investments was calculated as
follows:
<TABLE>
<S> <C>
Unrealized depreciation of investments:
Beginning of period....................................... $(3,763,639)
End of period............................................. (497,537)
-----------
Decrease in unrealized depreciation of investments...... $ 3,266,102
-----------
-----------
</TABLE>
NOTE E -- The change in the number of accumulation units outstanding was as
follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
1996 1995
----------- --------------
<S> <C> <C>
Balance at beginning of period....................................... 307,509 328,954
Accumulation units purchased......................................... 92 --
Accumulation units surrendered....................................... (12,455) (21,445)
----------- -------
Balance at end of period............................................. 295,146 307,509
----------- -------
----------- -------
</TABLE>
6
<PAGE>
- ----------------------------------------
MBL VARIABLE CONTRACT ACCOUNT -- 2
MBL Life Assurance Corporation
520 Broad Street - Newark, New Jersey 07102
- ---------------------------------------------
THIS REPORT HAS BEEN PREPARED FOR CONTRACT HOLDERS AND PARTICIPANTS IN MBL
VARIABLE CONTRACT ACCOUNT -- 2. IT IS NOT AUTHORIZED FOR OTHER DISTRIBUTION
UNLESS PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS WHICH INCLUDES
INFORMATION CONCERNING THE ACCOUNT AND THE APPLICABLE SALES COMMISSIONS.
FS-307 (8-96)
Semiannual Report
June 30, 1996
MBL VARIABLE
CONTRACT ACCOUNT -- 2
Group Variable Annuity Contracts
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