PROSPECTUS
April 23, 1996
MBL
VARIABLE CONTRACT ACCOUNT - 2
MBL Life Assurance Corporation
520 Broad Street, Newark, New Jersey 07102-3111
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MBL VARIABLE CONTRACT ACCOUNT-2
MBL Life Assurance Corporation
520 Broad Street, Newark, New Jersey 07102-3111
April 23, 1996
The group variable annuity contracts (the "Contracts") described in
this Prospectus were issued by The Mutual Benefit Life Insurance Company
("Mutual Benefit Life") and assumptively reinsured by MBL Life Assurance
Corporation ("MBL Life") to provide for retirement payments and other
benefits for persons covered ("Participants") under plans qualified for
federal income tax advantages ("Qualified Plans") under Section 401,
403(b), 408 or 457 of the Internal Revenue Code of 1986, as amended (the
"Code"). Contracts were issued to employers or associations which
established Qualified Plans or to trustees or custodians serving in
conjunction with such Plans ("Contract Holders"). The Contracts provide
benefits for Participants covered under those Plans and their
beneficiaries. In most cases, a Group Fixed Annuity Companion Contract
(the "Companion Contract"), which is not described in this Prospectus,
was also issued to the Contract Holder.
Sales of new Contracts ceased July 16, 1991. MBL Life does not
intend to resume sales of new Contracts. As of the effective date of
this Prospectus, however, additional purchase payments are being
accepted from existing and new Participants under the Contracts.
Under the Contracts, purchase payments will be accumulated before
retirement ("Accumulation Period"), and annuity payments can be received
after retirement ("Annuity Period"), on a variable basis. Variable
accumulations and variable annuity payments are funded through MBL
Variable Contract Account-2 (the "Account"), which is a "separate
account" of MBL Life. The Account invests in shares of MBL Growth Fund,
Inc. (the "Fund"), a mutual fund with the primary investment objective
of long-term appreciation of capital.
Existing Contracts, issued by Mutual Benefit Life, were assumed and
reinsured as of May 1, 1994 by MBL Life, in accordance with the
Rehabilitation Plan of Mutual Benefit Life as approved by the Superior
Court of New Jersey. Substantially all of the assets and certain
liabilities, including all insurance liabilities, of Mutual Benefit Life
were transferred to MBL Life as of May 1, 1994 (the "Transfer"). In
addition, the assets and liabilities of the Account were transferred to
a new separate account of MBL Life. MBL Life agreed to assume all the
assets and liabilities of the Account. (See "The Account - Legal
Developments".)
This Prospectus sets forth concisely the information about the
Account that Contract Holders and Participants should know before
investing. Additional information about the Account has been filed with
the Securities and Exchange Commission (the "SEC") including a Statement
of Additional Information which is incorporated herein by reference.
The Statement of Additional Information is available upon request and
without charge from MBL Life. Write to: Pension and Investment
Products, MBL Life Assurance Corporation, 520 Broad Street, Newark, New
Jersey 07102-3111, Attn: MBL VARIABLE CONTRACT ACCOUNT-2, or telephone:
1-800-435-3191. Contract Holder or Participant inquiries may be made to
the same address or telephone number. The table of contents for the
Statement of Additional Information appears on page 21.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS
IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS OF MBL GROWTH
FUND, INC.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
The date of the Statement of Additional Information is April 23, 1996.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF GROUP VARIABLE
ANNUITY CONTRACTS
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Eligible Contract Holders . . . . . . . . . . . . . . . . . . . 4
Basic Provisions. . . . . . . . . . . . . . . . . . . . . . . . 4
Variable Accumulation Account . . . . . . . . . . . . . . . . . 4
Variable Annuity . . . . . . . . . . . . . . . . . . . . . . . 4
Assumption of Risks . . . . . . . . . . . . . . . . . . . . . . 5
Redemption and Death Benefit. . . . . . . . . . . . . . . . . . 5
ACCUMULATION UNIT VALUES. . . . . . . . . . . . . . . . . . . . 5
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . 6
PERFORMANCE RELATED INFORMATION . . . . . . . . . . . . . . . . 6
THE ACCOUNT
Organization. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Legal Developments . . . . . . . . . . . . . . . . . . . . . . 7
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Administration and Distribution . . . . . . . . . . . . . . . . 8
THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . 8
CHARGES AND EXPENSES
Premium Tax . . . . . . . . . . . . . . . . . . . . . . . . . 9
Charges for Expense Risk, Mortality Risk and
Minimum Death Benefit . . . . . . . . . . . . . . . . . . . 9
Investment Advisory Fee . . . . . . . . . . . . . . . . . . . 9
Other Charges . . . . . . . . . . . . . . . . . . . . . . . . 9
ACCUMULATION ACCOUNT
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . 9
Variable Accumulation Account . . . . . . . . . . . . . . . . 10
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . 12
ANNUITY
Annuity Commencement Date . . . . . . . . . . . . . . . . . . 12
Purchase of Annuity . . . . . . . . . . . . . . . . . . . . . 13
Forms of Annuity. . . . . . . . . . . . . . . . . . . . . . . 13
Annuity Payments. . . . . . . . . . . . . . . . . . . . . . . 14
Variable Annuity Unit Value . . . . . . . . . . . . . . . . . 14
GENERAL RIGHTS
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . 14
Confirmation of Transactions. . . . . . . . . . . . . . . . . 15
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 15
457 Plan Participant. . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
FEDERAL INCOME TAX STATUS
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . 15
Taxation of MBL Life. . . . . . . . . . . . . . . . . . . . . 16
Tax Status of the Contract. . . . . . . . . . . . . . . . . . 16
Retirement Plans. . . . . . . . . . . . . . . . . . . . . . . 16
Taxation of Distribution. . . . . . . . . . . . . . . . . . . 18
Withholding . . . . . . . . . . . . . . . . . . . . . . . . . 18
Possible Changes in Taxation. . . . . . . . . . . . . . . . . 19
Other Tax Consequences . . . . . . . . . . . . . . . . . . . 19
OTHER CONTRACT PROVISIONS
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 19
Non-Assignability . . . . . . . . . . . . . . . . . . . . . . 19
Portability . . . . . . . . . . . . . . . . . . . . . . . . . 19
Failure of Plan to Qualify. . . . . . . . . . . . . . . . . . 19
Discontinuance. . . . . . . . . . . . . . . . . . . . . . . . 19
Transfer to New Funding Agency. . . . . . . . . . . . . . . . 20
Changes in Contract . . . . . . . . . . . . . . . . . . . . . 20
Other Changes . . . . . . . . . . . . . . . . . . . . . . . . 21
TABLE OF CONTENTS - STATEMENT OF ADDITIONAL INFORMATION . . . 21
INDEX OF TERMS
The following terms are explained on the pages indicated.
Account . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Accumulation Period . . . . . . . . . . . . . . . . . . . . . 1
Annuity Commencement Date . . . . . . . . . . . . . . . . . . 13
Annuity Period. . . . . . . . . . . . . . . . . . . . . . . . 1
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 19
Code . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Companion Contract. . . . . . . . . . . . . . . . . . . . . . 1
Contract Holder . . . . . . . . . . . . . . . . . . . . . . . 1
First Priority. . . . . . . . . . . . . . . . . . . . . . . . 8
401 Plan . . . . . . . . . . . . . . . . . . . . . . . . . 4, 17
403(b) Plan . . . . . . . . . . . . . . . . . . . . . . . . 4, 17
457 Plan . . . . . . . . . . . . . . . . . . . . . . . . . 4, 17
IRA Plan . . . . . . . . . . . . . . . . . . . . . . . . . 4, 17
MBL Life . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mutual Benefit Life . . . . . . . . . . . . . . . . . . . . . 1
Net Purchase Payment. . . . . . . . . . . . . . . . . . . . . 4
1940 Act . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Participant . . . . . . . . . . . . . . . . . . . . . . . . . 1
Qualified Plan. . . . . . . . . . . . . . . . . . . . . . . . 1
Rehabilitation Plan . . . . . . . . . . . . . . . . . . . . . 1
SEC . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Valuation Date. . . . . . . . . . . . . . . . . . . . . . . . 10
Variable Accumulation Account . . . . . . . . . . . . . . . . 4
Variable Accumulation Unit. . . . . . . . . . . . . . . . . . 10
Variable Annuity. . . . . . . . . . . . . . . . . . . . . . . 4
Variable Annuity Unit . . . . . . . . . . . . . . . . . . . . 14
<PAGE>
SUMMARY OF GROUP VARIABLE ANNUITY CONTRACTS
FEE TABLE
The purpose of the Fee Table is to help Contract Holders and
Participants (see "Basic Provisions") understand the various Account and
Fund expenses which they will bear, directly or indirectly. The Fee
Table, including the Example below, shows the expenses that are deducted
from both the Account and the Fund. For a description of the Account's
expenses, see "Charges and Expenses". For a description of the Fund's
expenses, see "Management" in the Fund Prospectus.
ACCOUNT ANNUAL EXPENSES
(as a percentage of average daily Account value)
Expense Risk Charge 0.25%
Mortality Risk and Death Benefit Charge 0.12%
----
Total Account Annual Expenses 0.37%
FUND ANNUAL EXPENSES
(as a percentage of Fund's daily average net assets)
Management Fees 0.37%
Other Expenses 0.49%
Total Fund Expenses* 0.86%
EXAMPLE
A $1,000 investment in the Account would be subject to the
expenses indicated, assuming (1) a 5.0% annual return and (2)
redemption at the end of each time period shown;**
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$13 $39 $68 $149
This example should not be considered a representation of past
or future expenses for the Account.
Actual expenses may be greater or less than those shown above.
Similarly, the annual rate of return assumed in the Example is not
an estimate or guarantee of future investment performance.
The expenses listed above do not include premium taxes,
currently charged by various states of up to 3.5%, which will be
deducted and paid to the states as required. (See "Charges and
Expenses - Premium Tax".)
_____________________________________
* The Fund's investment adviser has agreed to assume all
operating expenses of the Fund which, on an annual basis, exceed
1.5% of the first $30 million of the Fund's average daily net asset
value and which exceed 1% of any amount in excess of $30 million.
The operating expenses of the Fund did not exceed these limits
during the 1995 fiscal year; therefore, the amount of expenses
incurred has not been affected.
** There are no charges imposed upon redemption.
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ELIGIBLE CONTRACT HOLDERS
The Contracts described in this Prospectus are designed to provide
variable benefits for the following Qualified Plans:
1. employees covered under annuity purchase arrangements adopted
pursuant to Section 403(b) of the Code by public school systems and
non-profit organizations described in Section 501(c)(3) of the Code
("403(b) Plans"), including former employees who have been covered
under other such annuity purchase arrangements and have not
withdrawn their account balances;
2. employees covered under plans maintained by corporations,
partnerships and sole proprietorships which are qualified under
Section 401 of the Code ("401 Plans");
3. employees covered under deferred compensation plans qualified under
Section 457 of the Code ("457 Plans");
4. employees covered under individual retirement account plans
qualified under Section 408 of the Code ("IRA Plans" or "408
Plans").
The Code affords certain federal income tax advantages to
employers, employees and beneficiaries covered under these plans. (See
"Federal Income Tax Status".)
BASIC PROVISIONS
Net Purchase Payments made for or by Participants are invested
during the Accumulation Period before retirement. "Net Purchase
Payment" means the amount of a purchase payment for a Participant, less
any premium tax. At retirement, the current value of the accumulation
may be used to buy annuities designed to provide Participants with
monthly payments for life or shorter specified periods, during the
Annuity Period following retirement.
The Companion Contract, which is not described in this Prospectus,
was issued to the Contract Holder in conjunction with each Contract
issued. The charges and benefits under the Companion Contract are
included in the terms of that contract, which is separate from the
Contracts described in this Prospectus.
New Participants, who enroll after the effective date of this
Prospectus, participating in plans qualified under Section 408 of the
Code and, for residents of New York, plans qualified under Section
403(b), are entitled to a return of their initial premium payments
without cost within ten days of purchase under a ten-day revocation
provision.
VARIABLE ACCUMULATION ACCOUNT. Under the Contract, Net Purchase
Payments and/or permitted transfers from the Companion Contract and/or
MBL Variable Contract Account-7 ("VCA-7") are allocated to an Account
established on behalf of a Participant ("Variable Accumulation
Account"). (See "Transfers".) Amounts allocated to a Variable
Accumulation Account are placed in the Account. The assets of the
Account are invested in shares of the Fund, a mutual fund with the
primary investment objective of long-term appreciation of capital. The
value of a Participant's Variable Accumulation Account varies up or down
from day to day, depending on the value of the securities owned by the
Fund, and no assurance of investment results is made.
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VARIABLE ANNUITY. The funds used to buy a variable annuity remain in
the Account. Since the Account invests in shares of the Fund, the
dollar amount of variable annuity payments varies up and down from month
to month, depending on the value of the securities owned by the Fund,
and no assurance of investment results is made.
ASSUMPTION OF RISKS
MBL Life assumes the expense and mortality risks under the
Contracts. In doing so, it agrees (1) to pay all expenses during the
life of the Contracts, even if the charges made under the Contracts do
not cover the actual expenses incurred, (2) to continue making life
annuity payments under the Contracts, even if Annuitants, as a class,
live longer than actuarially assumed, and, (3) to pay the minimum death
benefit due. (See "Accumulation Account - Death Benefit".) A charge is
imposed on the Account for MBL Life's assumption of these risks. (See
"Charges and Expenses -Risk and Death Benefit Charges".)
REDEMPTION AND DEATH BENEFIT
Subject to any Qualified Plan restriction, the current value of a
Participant's Variable Accumulation Account may be withdrawn, in whole
or in part, at any time before the annuity payments begin (the "Annuity
Commencement Date") under a Contract. (See "Accumulation Account -
Redemption".) A penalty and/ or tax may be incurred under the Code upon
withdrawal of amounts accumulated under the Contracts offered by this
Prospectus, including a 10% penalty generally imposed on the taxable
amount of withdrawals prior to age 59 1/2 (subject to certain
exceptions). (See "Federal Income Tax Status".)
If a Participant dies before retirement, his or her beneficiary
receives the greater of either (1) the current value of the
Participant's Variable Accumulation Account as of the date MBL Life
receives due proof of death, or (2) the full amount of all purchase
payments less all transfers and redemptions made for the Participant.
ACCUMULATION UNIT VALUES
The Accumulation Unit values as of the beginning of the period and
the end of the period for each of the last ten fiscal years, as well as
the total number of Accumulation Units outstanding at the end of each
fiscal year, are as follows:
Accumulation Accumulation Number of
Unit Value- Unit Units
Beginning Value-End Outstanding
Year Ending of Period of Period End of Period
December 31, 1995 $86.596 $116.231 307,509
December 31, 1994 85.055 86.596 328,954
December 31, 1993 75.010 85.055 354,251
December 31, 1992 65.668 75.010 379,590
December 31, 1991 53.234 65.668 494,857
December 31, 1990 56.416 53.234 1,014,455
December 31, 1989 44.032 56.416 909,129
December 31, 1988 34.625 44.032 810,345
December 31, 1987 35.483 34.625 794,267
December 31, 1986 29.344 35.483 717,772
<PAGE>
FINANCIAL STATEMENTS
The financial statements for the Account (as well as the auditor's
report thereon) may be found in the Account's 1995 Audited Financial
Statements. The Account will furnish without charge an additional copy
of these Audited Financial Statements upon request made to Pension and
Investment Products, MBL Life Assurance Corporation, 520 Broad Street,
Newark, New Jersey 07102-3111, Attn: MBL VARIABLE CONTRACT ACCOUNT-2, or
by telephoning 1-800-435-3191.
The financial statements of MBL Life may be found in the Statement
of Additional Information.
PERFORMANCE RELATED INFORMATION
The Account may from time to time advertise "average annual total
return". Average annual total return measures the change in the value
of an investment in the Account's Variable Accumulation Units over the
periods illustrated. (See "Variable Accumulation Account".) This
performance-related information is based upon the Account's past
performance. The investment return and principal value on an investment
in the Account's units will fluctuate so that the units, when redeemed,
may be worth more or less than their original cost.
When the Account advertises its average annual total return, it
will be calculated for one year, five years and ten years and will
assume a total redemption at the end of each period. Average annual
total return is calculated by comparing the value of a hypothetical
$1,000 investment in the Account at the beginning of the relevant period
to the value of the investment at the end of the period assuming a
redemption of all Variable Accumulation Units (see "Variable
Accumulation Account") at the end of the period. (See the Account's
Statement of Additional Information, "Calculation of Performance Data".)
There are no nonrecurring charges to be deducted upon a redemption of
all units.
Average annual total return at the Account level includes all
recurring Contract charges currently applicable. As of the date of this
Prospectus, the only Contract charge currently applicable is 1) a charge
of 0.37%, of which 0.25% is allocated for MBL Life's assumption of
expense risks and 0.12% is allocated for its assumption of mortality
risks and the provisions of the minimum death benefit (see "Charges and
Expenses - Charges for Expense Risk, Mortality Risk and Minimum Death
Benefit", and "Accumulation Account - Death Benefit"). The one-time
Participant enrollment fee (up to $15.00) and annual administration
charge (up to $10.00 and up to $0.50 per purchase payment and transfer,
or 2.00% of accumulation accounts, if less) which were deducted until
December 31, 1988, and which were eliminated as of January 1, 1989, are
included in the average annual total return figures illustrated. The
total return figures, as illustrated, do not take into account any sales
charge which would have been deducted from the purchase payment, if made
prior to January 1, 1989. The inclusion of the sales charge in the
total figures would have reduced the average annual total return
illustrated for each period.
<PAGE>
The Account may from time to time advertise a comparison of its
average annual total return to the Standard and Poor's 500 Stock Index
(S&P 500) which represents an unmanaged, weighted index of 500
industrial, transportation, utility and financial companies widely
regarded by investors as representative of the stock market. As a
benchmark, this index is not subject to any charges for investment
advisory or other expenses of the type charged at either the Account or
the Fund level. Therefore, the comparison shown in any advertising by
the Account, with this benchmark, may be of limited use.
To calculate the average annual total return, the value of a
Variable Accumulation Account terminated on December 29, 1995 is divided
by the $1,000 purchase payment made by a Participant at the beginning of
each period illustrated. The result of that calculation is the total
growth rate for that period. The total growth rate is then "annualized"
to obtain the average annual percentage increase (decrease) during the
period illustrated. An annualized rate assumes that a single rate of
return, applied each year during the period illustrated, will produce
the ending value, taking into account the effect of compounding.
THE ACCOUNT
ORGANIZATION
The Account is registered with the SEC as an investment company, in
the form of a "unit investment trust", under the Investment Company Act
of 1940 (the "1940 Act"). Registration under the 1940 Act involves
regulation by the SEC, but does not involve supervision or management of
investment practices or policies of either the Account or the
Registrant. The Account was established in 1969 under New Jersey law
pursuant to a resolution of the Board of Directors of Mutual Benefit
Life. The assets and liabilities of the Account were transferred to a
separate account of MBL Life as of May 1, 1994 pursuant to a resolution
of the Board of Directors of MBL Life.
MBL Life is a New Jersey stock life insurance company, incorporated
in 1972, with its principal office at 520 Broad Street, Newark, New
Jersey. Its stock is held in a Stock Trust, pursuant to the
Rehabilitation Plan of Mutual Benefit Life, MBL Life's former parent.
LEGAL DEVELOPMENTS
The Account was originally a separate account of Mutual Benefit
Life. On July 16, 1991, the Superior Court of New Jersey ("Court")
entered an Order ("Order") appointing the Insurance Commissioner of the
State of New Jersey as Rehabilitator of Mutual Benefit Life, thereby
granting the Rehabilitator immediate exclusive possession and control
of, and title to, the business and assets of Mutual Benefit Life,
including those of the Account.
<PAGE>
In view of the terms and conditions of the Order, on July 16, 1991,
Mutual Benefit Life, on behalf of the Account, immediately ceased
acceptance of applications for new Contracts and additional purchase
payments under existing Contracts. The cessation of additional purchase
payments continued from July 16, 1991 until the effective date of this
Prospectus. Because the Account was a separate account of Mutual
Benefit Life, the assets and liabilities of the Account were maintained
separate and apart from Mutual Benefit Life's general account assets and
liabilities. Transfers to the VCA-7 Contract were temporarily
suspended. Transfers from the Account to the Companion Contract were
temporarily prohibited and withdrawals from the Companion Contract were
restricted during the Rehabilitation Period. Death benefit payments
upon the death of each Participant continued to be made to the
beneficiaries.
A Rehabilitation Plan was developed by the Rehabilitator, the terms
of which were subsequently approved and confirmed by the Court in
January 1994. Certain terms and conditions of the Rehabilitation Plan
have been appealed by parties to the Rehabilitation Plan, and litigation
has been brought against Mutual Benefit Life, the ultimate resolution of
which cannot be determined at this time.
The Rehabilitation Plan stipulated that the assets and liabilities
of the Account would be transferred from Mutual Benefit Life to a
separate account of MBL Life. The transfer was effected pursuant to an
assumption reinsurance transaction on May 1, 1994. Under the
Rehabilitation Plan, MBL Life assumed substantially all of the business,
assets and liabilities of Mutual Benefit Life. MBL Life will operate
under and is governed by the terms and conditions of the Rehabilitation
Plan until the termination of the Rehabilitation Period, not later than
December 31, 1999. While the Rehabilitation Plan was developed based on
the Rehabilitator's best estimates, no assurance can be provided that
the Rehabilitation Plan will ultimately be successful. For more
information, see the financial statements of MBL Life contained in the
Statement of Additional Information.
As of May 1, 1994, all of the issued and outstanding shares of MBL
Life were placed in a Stock Trust which is to terminate at the end of
the Rehabilitation Period. The Commissioner of Insurance was appointed
Trustee of the Stock Trust. On July 5, 1995, Alan J. Bowers was
appointed President and Chief Executive Officer of MBL Life.
MBL Life reserves all rights regarding the use of its name, or any
part of its name, including the right to withdraw its use by the Account
or to grant its use to any other investment company or entity.
ASSETS
The assets placed in the Account include (1) amounts allocated to
provide Variable Accumulation Accounts or variable annuities under the
Contracts and (2) advances made by MBL Life for support of its
obligations under the Contracts.
<PAGE>
While the Account is an asset of MBL Life, it is held separately
from all other assets of MBL Life. The Contracts provide that any
income, gains or losses, whether or not realized, from assets allocated
to the Account, in accordance with the Contract, are credited to or
charged against the Account without regard to any other income, gains or
losses of MBL Life. The assets of the Account may not be charged with
liabilities arising out of any other business of MBL Life. The
Contracts also provide that MBL Life shall maintain the assets of the
Account in an amount at least equal to the amount required for MBL Life
to meet its obligations under the Contracts, as determined at least once
each year. MBL Life will transfer cash from its general account to make
up any deficiency in the Account and, conversely, may transfer any
excess assets in cash from the Account to its general account or hold
any such excess in the Account.
Advances made to the Account by Mutual Benefit Life prior to
December 31, 1989 in connection with the operation of the Account were
not subject to deductions for the enrollment fee, the sales charge and
the administrative charge then in effect. To the extent that the 1940
Act requires MBL Life to hold voting rights with respect to such
amounts, MBL Life, as a matter of policy, will cast its votes on each
matter in the same proportion as those cast by Contract Holders.
ADMINISTRATION AND DISTRIBUTION
The Account has no directors, officers, or employees. First
Priority Investment Corporation ("First Priority") serves as the
Account's principal underwriter. First Priority is a wholly-owned
indirect subsidiary of MBL Life. First Priority also serves as
principal underwriter for MBL Variable Contract Account-3, and MBL
Variable Contract Account-7, which are other separate accounts of MBL
Life, and as distributor for mutual funds sponsored by MBL Life. First
Priority also engages in the sale of other investment company securities
and other financial products. Administrative services necessary for the
operation of the Account and the Contracts are provided by MBL Life.
These administrative services include, but are not limited to,
processing purchase payments, annuity payments, redemptions and
transfers; making commission payments; furnishing confirmation notices
and periodic reports; preparing prospectuses, voting materials and tax
reports; and providing or arranging for accounting, actuarial and legal
services.
THE FUND
The primary objective of the Account is to provide annuity payments
which are designed to guard against adverse changes in the cost of
living both during the Accumulation Period and during the Annuity
Period. In seeking to achieve this objective, the assets of the Account
are invested in shares of the Fund, a mutual fund investing primarily in
common stocks and other equity type investments. Information about the
Fund, including its investment objectives and policies, is set out in
the Fund prospectus which should be read together with this Prospectus.
The investor should read the Fund's prospectus carefully before
investing. Copies of the Fund's Prospectus and Statement of Additional
Information are available upon request and without charge from MBL Life.
Write to: Pension and Investment Products, MBL Life Assurance
Corporation, 520 Broad Street, Newark, New Jersey 07102-3111, Attn: MBL
Variable Contract Account-2, or telephone: 1-800-435-3191.
<PAGE>
The Fund's investment adviser is Markston Investment Management
("Markston"), a partnership between Markston International, Inc. and
MBL Sales Corporation ("MBL Sales"). MBL Sales is a wholly-owned
indirect subsidiary of MBL Life.
Historically, the value of a sizeable and representative group of
common stocks, held for an extended period of time, has tended to rise,
particularly during periods of rising costs. However, there has been no
exact correlation, and for some periods, the value of common stocks has
fallen, while the cost of living was rising. Accordingly, no assurance
can be given that the Account will achieve its objective.
The Account buys Fund shares with no sales load. Any dividend or
capital gains distribution received from the Fund is ordinarily credited
in the form of additional Fund shares. To the extent necessary to make
payments promised under the Contracts, the Account redeems Fund shares
at net asset value with no redemption fee.
CHARGES AND EXPENSES
PREMIUM TAX
Premium taxes, ranging up to 3.50%, are currently levied by various
states. If premium taxes are incurred by an Account, a charge for the
amount of these taxes will be made when the taxes are incurred.
CHARGES FOR EXPENSE RISK, MORTALITY RISK AND MINIMUM DEATH BENEFIT
A charge at the annual rate of 0.37% is made daily against each
Participant's Variable Accumulation Account and against each Annuitant's
variable annuity. The allocation of the charge during the Accumulation
Period is 0.25% for MBL Life's assumption of expense risks and 0.12% for
its assumption of mortality risks and the provision of the minimum death
benefit. After the commencement of annuity payments, all of this 0.37%
is for mortality risks. MBL Life reserves the right to alter the
allocation of the charge between these items, based on its experience in
administering the Contracts.
If these charges are less than the expenses assumed, MBL Life may
suffer a loss. However, if the charges are more than the expenses
assumed by MBL Life, then there will be a contribution to MBL Life's
surplus, which may be used for any legitimate corporate purpose,
including distribution of the Contracts.
INVESTMENT ADVISORY FEE
For the investment advisory services of Markston, the Fund pays a
periodic fee based on a percentage of net assets. The fee is reflected
in the net asset value computation for the Fund, computed and accrued
daily and paid quarterly.
The investment advisory compensation arrangement as well as the
expenses of the Fund are fully described in the Fund's prospectus and
the Fund's Statement of Additional Information.
<PAGE>
OTHER CHARGES
Currently, no charges are made against the Account for MBL Life's
federal income taxes, or provisions for such taxes, that may be
attributable to the Account. MBL Life may charge the Account for its
portion of any income tax charged to MBL Life on the Account or its
assets. Under present laws, MBL Life may incur state and local taxes
(in addition to premium taxes) in several states. At present, these
taxes are not significant. If they increase, however, MBL Life may
decide to make charges for such taxes, or provisions for such taxes,
against the Account. Any charges made against the Account could have an
adverse effect on the investment experience of the Account.
ACCUMULATION ACCOUNT
PURCHASE PAYMENTS
Initial Net Purchase Payments are invested at the value next
computed, not later than two business days, after an application in good
order and payment has been received by MBL Life at its Home Office in
Newark, New Jersey (the "Home Office").
The Contracts offer flexible purchase payment arrangements which
may be tailored for individual plans as follows:
FREQUENCY. Purchase payments may be made for active Participants
whenever desired, except not more frequently than every two weeks.
AMOUNT. Under 403(b), 408, and 457 Plans, the annuity purchase
agreement or salary reduction agreement, between each Participant
and his or her employer must specify that contributions on the
Participant's behalf will be at least $240 during each year under
the Plan.
CONTINUITY. Purchase payments for a Participant may be
discontinued at any time, without any effect on the Participant's
rights under the Contract. Purchase payments may be resumed at a
later date at no additional charge.
VARIABLE ACCUMULATION ACCOUNT
Net Purchase Payments are allocated to a Participant's Variable
Accumulation Account and transfers from VCA-7 are applied to purchase
Variable Accumulation Units. Each Variable Accumulation Unit represents
a proportionate interest in the assets of the Account. The investment
performance of the Fund and deduction of charges and expenses (see
"Charges and Expenses") affect the value of the Variable Accumulation
Units as described below.
The number of Variable Accumulation Units purchased is equal to
each Net Purchase Payment, divided by the current dollar value of a
Variable Accumulation Unit, after the initial purchase payment, at the
value next computed after receipt of each purchase payment.
The value of a Variable Accumulation Unit was $10 for January 21,
1971, the day when sales of the Contracts commenced. For a list of the
Variable Accumulation Unit values on the last Valuation Date of each of
the last ten fiscal years, see "Accumulation Unit Values".
<PAGE>
The Variable Accumulation Unit is calculated as of the end of each
Valuation Date, which is a day when the New York Stock Exchange is open
for trading. For any Valuation Date, the Variable Accumulation Unit
value is equal to the value for the preceding Valuation Date multiplied
by the Net Investment Factor for the current Valuation Date. For any
day which is not a Valuation Date, the Variable Accumulation Unit value
is equal to the value for the following Valuation Date. The Variable
Accumulation Unit value may vary either up or down on each Valuation
Date.
The Net Investment Factor for any Valuation Date is equal to the
Gross Investment Factor less a deduction at an effective annual rate of
0.37% for the expense and mortality risk and death benefit charges. The
Gross Investment Factor as of a Valuation Date is equal to (1) the net
asset value of a Fund share computed as of the close of regular trading
on the New York Stock Exchange on that date, plus the per share amount
of any dividends and other distributions made by the Fund since the
preceding Valuation Date, less a deduction for any applicable taxes (at
present, no such federal tax is payable), divided by (2) the net asset
value of a Fund share computed as of such close on the preceding
Valuation Date. For a hypothetical example illustrating the computation
of the Variable Accumulation Unit value and the Net Investment Factor,
see the Account's Statement of Additional Information. In effect, each
Net Purchase Payment (after the first) is invested in Variable
Accumulation Units at the value next computed after receipt of such
payment by MBL Life at its Home Office. Thereafter, Variable
Accumulation Units credited under a Contract will vary up or down in
value, depending on the value of the Fund shares held by the Account.
TRANSFERS
Transfers between the Companion Contract and the Variable
Accumulation Account will be subject to the transfer provisions
contained in the Companion Contract, including any limitations or
restrictions contained in that contract. Transfers may be made only on
a Valuation Date as defined in this Prospectus. All transfers will be
based on the Variable Accumulation Unit value calculated on the
effective date of the transfer.
MBL Life reserves the right to impose restrictions upon the
transfer privilege at any time, upon 30 days written notice to each
Contract Holder affected. In such event, transfers will be permitted
only once a quarter. This restriction may only be applied to Contracts
to the extent that (1) the expected total annual deposit by a Contract
Holder on behalf of all Participants to both the Variable Accumulation
Account and the Companion Contract and VCA-7 Contract, if any, is $3
million or more, or (2) there are existing plan assets under the
Contracts representing purchase payments made by the employer,
association or corporation sponsoring the plan, other than as a result
of a Participant salary reduction arrangement, or (3) the plan sponsor
controls the allocation of contributions among this VCA-2 Contract, the
Companion Contract, and the VCA-7 Contract, or (4) the plan sponsor
controls transfers among the VCA-2 Contracts, the Companion Contract and
the VCA-7 Contract before imposing such a restriction. MBL Life will
submit appropriate changes to the Contract to the state insurance
commissions for approval.
<PAGE>
To the extent that a VCA-2 Contract Holder also holds a contract
for VCA-7, the Contract Holder may provide Qualified Plan Participants
the opportunity to provide for retirement and other benefits through
pooled investments in short-term debt instruments. The objective of
VCA-7 is to provide as high a level of current income as is consistent
with preservation of capital and maintenance of liquidity.
If a VCA-7 Contract was issued, amounts may be transferred between
a Qualified Plan Participant's Variable Accumulation Account under the
VCA-2 Contract to the VCA-7 Contract as described under "Transfers"
except that transfers to the VCA-7 Contract may not exceed once a
quarter. Transfers to the VCA-7 Contract are subject to the charges,
limitations and restrictions contained in the VCA-7 Contract. Amounts
transferred to a VCA-2 Contract from a VCA-7 Contract will be subject to
charges imposed under those contracts.
Until the termination of the Rehabilitation Period, no later than
December 31, 1999, transfers from the Variable Accumulation Account
under the VCA-2 Contract to the Companion Contract may only be made upon
retirement. (See "The Account - Legal Developments".)
Variable Accumulation Account values will also be transferred to
the Companion Contract upon the death of a Participant (see
"Accumulation Account - Death Benefit"), or if a Qualified Plan fails to
qualify under the Code (see "Other Contract Provisions - Failure of Plan
to Qualify").
A VCA-7 prospectus is available upon request made to Pension and
Investment Products, MBL Life Assurance Corporation, 520 Broad Street,
Newark, New Jersey 07102-3111, Attn: MBL VARIABLE CONTRACT ACCOUNT-7 or
by telephoning 1-800-435-3191.
REDEMPTION
The current value of a Participant's Variable Accumulation Account
may be withdrawn or transferred to another tax qualified investment, in
whole or in part, at any time before his or her Annuity Commencement
Date under the Contract. However, under 401, 403(b) or 457 Plans, the
withdrawal right may be restricted in accordance with applicable federal
income tax law. (See "Federal Income Tax Status".)
Certain plans may require forfeiture of non-vested employer
contributions, such as upon termination of employment, and may also
provide that certain contributions may not be withdrawn until the
occurrence of a specified event, such as attainment of age 59 1/2. The
terms of your plan should be reviewed to determine if contributions on
your behalf are so restricted. Any partial redemption must amount to at
least $240.
Redemption is effected by canceling a sufficient portion of the
Variable Accumulation Account to pay the amount requested. The number
of units canceled in the Variable Accumulation Account is based on their
value next computed after receipt of a written request by MBL Life at
its Home Office. Requests may be made on forms provided to Contract
Holders by MBL Life, or by letter. Forms may be obtained by calling 1-
800-435-3191.
<PAGE>
A request for partial redemption of a Participant's Variable
Accumulation Account is treated as a request for complete redemption if
the total value of the account would otherwise be less than $240, or if
the redemption request is for an amount which exceeds the value of the
account. After complete redemption of a Participant's Variable
Accumulation Account, no further purchase payments may be made for the
Participant without the consent of MBL Life.
Payment of the amount redeemed is made within seven days after
receipt of request, unless (1) the New York Stock Exchange is closed
(for reasons other than holidays and weekends), or trading on the New
York Stock Exchange is restricted, (2) an emergency exists, as
determined by the SEC, so that valuation of the assets of the Account,
or redemption of the Fund shares held by the Account, is not reasonably
practicable, or (3) the SEC permits postponement by order.
The withdrawal of funds from the Account may adversely affect tax
benefits otherwise available under the Code. (See "Federal Income Tax
Status".) Under 403(b) Plans, current restrictions imposed by the Code
limit withdrawals. (See "Federal Income Tax Status - 403(b) Plans".)
The preceding discussion of redemption applies only to the Variable
Accumulation Account. Redemption of amounts under the Companion
Contract will be subject to the redemption provisions contained in the
Companion Contract, including any limitations or charges specified in
that contract.
DEATH BENEFIT
If a Participant dies before the Annuity Commencement Date, a death
benefit is payable to the beneficiary. The death benefit is equal to
the greater of (1) the current value of the Participant's Variable
Accumulation Account (determined as of the date MBL Life receives due
proof of death), or (2) the full amount of all purchase payments less
all transfers and redemptions made for the Participant. The death
benefit may be paid in one of several ways. The beneficiary may
instruct MBL Life to pay the amount in a single sum. [In either case,
the request must be in writing.] If the beneficiary is a spouse of the
Participant, the Variable Accumulation Account may be continued;
however, no purchase payments may be made.
In general, the rights of beneficiaries are subject to the same
conditions as corresponding rights of Participants. In addition, the
rights of a beneficiary may be subject to restrictions imposed by the
Participant in designating his or her beneficiary.
ANNUITY
ANNUITY COMMENCEMENT DATE
A Participant's Variable Accumulation Account Value generally must
begin to be distributed in accordance with Code Section 403(b)(10) no
later than April 1 of the calendar year following the calendar year in
which the Participant reaches age 70 1/2. A surviving spouse who has
made the election in Section 4.3(c) of the Contract must begin to
receive the Variable Accumulation Account Value no later than April 1 of
the calendar year following the calendar year in which the Participant
would have reached age 70 1/2.
<PAGE>
Where the Participant is a public school employee, the above
required distribution date may, generally, be extended to the April 1 of
the calendar year following the later of (1) the calendar year in which
the Participant reaches age 70 1/2, or (2) retires from such employment.
Distributions will be made in accordance with the terms of the Contract.
The preceding distribution requirement does not apply to tax-deferred
annuity account balances accrued before January 1, 1987.
A Participant may elect to apply all or part of his or her Account
Value as consideration for the purchase of an annuity ("Annuity
Consideration"). The date on which such annuity is to begin, as elected
by the Participant, shall be specified in a written notice to MBL Life,
provided however, that such date may not be earlier than 15 days after
the date of receipt by MBL Life of such notice.
PURCHASE OF ANNUITY
Effective on a Participant's Annuity Commencement Date, as
specified in the written notice to MBL Life, the Participant's Annuity
Consideration shall be applied to provide an annuity for the Participant
subject to the following:
(a) Any premium tax on Annuity Consideration that MBL Life is required
to pay, based on the state of residence of the Participant, will be
deducted from the Annuity Consideration.
(b) The amount remaining after deduction of the premium tax will be
applied to provide an annuity. Unless the use of another table of
amounts of annuity shall have been agreed to in writing by the
Contract Holder and MBL Life, the amount of each monthly payment of
the annuity will be determined by dividing the remaining Annuity
Consideration by the appropriate rate determined in accordance with
the Variable Annuity Table (Table 1 of the Contract) according to
the form of annuity and the age of the annuitant on the Annuity
Commencement Date.
If a Participant's first annuity payment would be less than $20,
the value of the Variable Accumulation Account may be paid to the
Participant in a lump sum as a complete redemption, at the discretion of
MBL Life.
MBL Life will issue a certificate to each Annuitant at the time the
first annuity payment becomes payable, describing the Participant's
rights under the annuity. Once any life annuity takes effect, it may
not be redeemed or changed to any other form of annuity.
FORMS OF ANNUITY
The Participant may elect one of the alternate forms listed below:
(a) Period-Certain and Life Annuity
The Period-Certain and Life Option provides a monthly annuity
to the Participant during the Participant's lifetime, the
first 60, 120, 180 or 240 payments of which, as specified by
the Participant in the notice of election of this option,
shall be period-certain payments. If at the death of the
Participant any period-certain payments remain unpaid, such
unpaid period-certain payments shall be continued to the
Participant's beneficiary.
<PAGE>
(b) Contingent Annuitant With Ten Years Certain
The Contingent Annuitant Option provides a monthly annuity
payable to the Participant during his or her lifetime, and
payable after his or her death to the Contingent Annuitant
designated by the Participant at the time of election of this
option, during such Contingent Annuitant's lifetime. The
first 120 payments are designated as period-certain payments.
If at the death of the second to die of the Participant and
his or her Contingent Annuitant any period-certain payments
remain unpaid, such unpaid period-certain payments shall be
continued to the Participant's beneficiary. The amount of
monthly annuity payable to the Contingent Annuitant may be
100%, 67%, or 50% of the reduced annuity payable to the
Participant, as specified in the notice of election of this
option. Regardless of the selected percentage, however, the
annuity payable to the Contingent Annuitant, before 120
payments have been made, shall be equal to 100% of the annuity
payable to the Participant.
(c) Period-Certain Annuity
The Period-Certain Annuity provides a monthly annuity payable
for a period-certain of 60, 120 or 180 months as selected by
the Participant. Upon expiration of the period-certain
payments, no further payments are due. If at the death of the
Participant any period-certain payments remain unpaid, they
shall be continued to the Participant's beneficiary until the
total period-certain payments selected have been made to the
Participant and the beneficiary.
(d) Other Forms
Other forms of annuity may be selected by the Participant with
the written consent of MBL Life.
ANNUITY PAYMENTS
The first annuity payment is payable on the Annuitant's Annuity
Commencement Date under the Contract. The second and subsequent annuity
payments are payable monthly thereafter. The method for determining the
amount of the first, second and subsequent annuity payments is described
in the Account's Statement of Additional Information.
VARIABLE ANNUITY UNIT VALUE
The value of a Variable Annuity Unit for any month is calculated as
of the end of the fourteenth day preceding the first day of the month.
It is equal to the Variable Annuity Unit value for the previous month
multiplied by the product of .997137 and the ratio of (1) the Variable
Accumulation Unit value for the fourteenth day preceding the first day
of the month, divided by (2) the Variable Accumulation Unit value for
the fourteenth day preceding the first day of the previous month. The
Variable Annuity Unit value may vary either up or down each month.
<PAGE>
The factor of .997137, applied each month, reflects an assumed
investment result at an effective annual rate of 3 1/2%. This assumed
investment result is also used in determining the rates which appear in
the tables in the Contracts and which are used to determine the amount
of the first payment under a variable annuity. An assumed investment
result higher than 3 1/2% may be used for a particular group in order to
provide larger variable annuity payments during the initial months, by
mutual agreement between the Contract Holder and MBL Life. However, a
higher assumed investment result also means a lower factor than .997137
in the determination of the Variable Annuity Unit values for that
particular group. For example, if the assumed investment result is 4
1/2% instead of 3 1/2%, the variable annuity payments to a retired male
Participant, age 65, under a life annuity with 120 monthly payments
certain will start about 8% higher, but this advantage will steadily
diminish, and the payments after the eighth year (approximately) will
become lower with the 4 1/2% assumption than they would be with the 3
1/2% assumption.
The Variable Annuity Unit value will vary up or down each month
only to the extent that the actual net investment results are more or
less favorable than the assumed investment results. The actual net
investment results include both income and market value changes of the
Account value, as reflected in the ratio of the two applicable Variable
Accumulation Unit values. For a hypothetical example illustrating the
computation of the Variable Annuity Unit value see the Account's
Statement of Additional Information.
GENERAL RIGHTS
VOTING RIGHTS
Contract Holders have the right to instruct MBL Life as to voting
Fund shares held by the Account on all matters to be voted on by Fund
shareholders. The number of votes attributed to each Contract Holder is
determined by dividing the value of all Variable Accumulation Accounts
under the Contract by the net asset value of one Fund share. The number
of Fund shares attributable to Annuitants under the Contract is
determined by dividing the reserves maintained in the Account to meet
variable annuity obligations under the Contract by the net asset value
of one Fund share.
During the Accumulation Period, Participants have the right to
instruct Contract Holders as to casting applicable votes with respect to
Variable Accumulation Accounts under 403(b) Plans or their own purchase
payments under Qualified Plans. During the Annuity Period, Annuitants
have similar rights with respect to the variable annuities. The number
of votes attributable to an Annuitant decreases as variable annuity
payments are made.
MBL Life furnishes Fund proxy material and voting instruction forms
to each Contract Holder and Participant. Fund shares held by the
Account for which MBL Life receives no voting instructions will be voted
on each matter in the same proportion as such shares for which voting
instructions are received. Fund shares held by MBL Life will also be
voted on each matter in the same proportion as such shares for which
voting instructions are received.
<PAGE>
CONFIRMATION OF TRANSACTIONS
Within five business days after the end of each calendar quarter,
a quarterly statement will be sent to each Participant detailing all
activity in the Participant's Variable Accumulation Account for the
previous quarter, including purchase payments, redemptions and
transfers, the dates of each such transaction, the amounts allocated to
the Variable Accumulation Account, the sales and other charges deducted,
and the total account value at the end of the period. New Participants
will be sent a confirmation upon receipt of the first purchase payment,
and quarterly statements thereafter. In some cases, confirmations may
be sent more frequently than quarterly.
REPORTS
During the Accumulation Period, MBL Life furnishes a quarterly
report for each Participant showing as of a specified date (1) the
number of units in his or her Variable Accumulation Account and (2) the
Variable Accumulation Unit value. During the Annuity Period, MBL Life
will include with each variable annuity payment a statement showing the
number of Variable Annuity Units and the Variable Annuity Unit value
used in determining the amount of the annuity payment.
In addition, MBL Life will furnish, for each Participant and
Annuitant, a semi-annual report showing the financial position of the
Account, and a schedule of the common stocks and other investments held
by the Fund.
457 PLAN PARTICIPANTS
The rights and benefits of employees participating in a 457 Plan
differ from those of Participants covered under Contracts issued under
other circumstances. Under a 457 Plan, the Contract Holder is usually
the employer, and the assets of such Plan are part of the general assets
of the employer. A Participant must look exclusively to his or her
employer and the employer's financial resources for any benefits to
which the Participant is entitled. Accordingly, all rights of 457 Plan
Participants referred to or described in this Prospectus are vested in
the Contract Holder.
FEDERAL INCOME TAX STATUS
INTRODUCTION
The following discussion is a general discussion of federal income
tax considerations relating to the Contract and is not intended as tax
advice. This discussion is not intended to address the tax consequences
resulting from all of the situations in which a person may be entitled
to or may receive a distribution under the Contract. Any person
concerned about these tax implications should consult a competent tax
advisor before initiating any transaction. This discussion is based
upon MBL Life's understanding of the present federal income tax laws as
they are currently interpreted by the Internal Revenue Service ("IRS").
No representation is made as to the likelihood of the continuation of
the present federal income tax laws or of the current interpretation by
the IRS. Moreover, no attempt has been made to consider any applicable
state or other tax laws.
<PAGE>
The Contract may be purchased on a non-tax qualified basis ("Non-
Qualified Contract") or purchased and used in connection with certain
retirement arrangements entitled to special income tax treatment under
Section 401(a), 403(b), 408(b) or 457 of the Code ("Qualified
Contracts").
TAXATION OF MBL LIFE
MBL Life is taxed as a life insurance company under Part I of
Subchapter L of the Code. Since the Account is not an entity separate
from the Company, and its operation forms a part of the MBL Life, it
will not be taxed separately as a "regulated investment company" under
Subchapter M of the Code. Investment income and realized capital gains
are automatically applied to increase reserves under the Contracts.
Under existing federal income tax law, MBL Life believes that the
Account investment income and realized net capital gains will not be
taxed to the extent that such income and gains are applied to increase
the reserves under the Contracts.
Accordingly, MBL Life does not anticipate that it will incur any
federal income tax liability attributable to the Separate Account and,
therefore, MBL Life does not intend to make provisions for any such
taxes. However, if changes in the federal tax laws or interpretations
thereof result in MBL Life being taxed on income or gains attributable
to the Account, then MBL Life may impose a charge against the Account
(with respect to some or all Contracts) in order to set aside provisions
to pay such taxes.
TAX STATUS OF THE CONTRACT
DIVERSIFICATION. Section 817(h) of the Code requires that with
respect to certain contracts, the investments of the Account must be
"adequately diversified", in accordance with Treasury Regulations in
order for those Contracts to qualify as annuity contracts under federal
tax law.
In certain circumstances, owners of variable annuity contracts may
be considered the owners, for federal income tax purposes, of the assets
of the separate accounts used to support their contracts. In those
circumstances, income and gains from the separate account assets would
be includible in the variable contract owner's gross income. The IRS
has stated in published rulings that a variable contract owner will be
considered the owner of separate account assets if the contract owner
possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. The Treasury Department
has also announced, in connection with the issuance of regulations
concerning diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control for the
investments of a segregated asset account may cause the investor [i.e.,
the owner], rather than the insurance company, to be treated as the
owner of the assets in the account". This announcement also stated that
guidance would be issued by way of regulations or rulings on the "extent
to which policyholders may direct their investments to particular Sub-
Accounts without being treated as owners of the underlying assets." As
of the date of this Prospectus, no guidance has been issued.
<PAGE>
The ownership rights under the Contract are similar to, but
different in certain respects from those described by the IRS in rulings
in which it was determined that contract owners were not owners of
separate account assets. These differences could result in an owner
being treated as the owner of a pro rata portion of the assets of the
Account. In addition, MBL Life does not know what standards will be set
forth, if any, in the regulations or rulings which the Treasury
Department has stated it expects to issue. MBL Life therefore reserves
the right to modify the Contract as necessary to attempt to prevent an
owner from being considered the owner of a pro rata share of the assets
of the Account.
RETIREMENT PLANS
IN GENERAL. The Contract is designed for use with several types of
retirement plans. The tax rules applicable to participants and
beneficiaries in retirement plans vary according to the type of plan and
the terms and conditions of the plan. Special favorable tax treatment
may be available for certain types of contributions and distributions.
Adverse tax consequences may result from contributions in excess of
specified limits; distributions prior to age 59 1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement
and minimum distribution rules; aggregate distributions in excess of a
specified annual amount; and in other specified circumstances. For
example, a 10% penalty generally will be imposed on the taxable amount
of withdrawals prior to age 59 1/2, subject to certain exceptions.
MBL Life makes no attempt to provide more than general information
about use of the Contracts with the various types of retirement plans.
Owners and participants under retirement plans as well as annuitants and
beneficiaries are cautioned that the rights of any person to any
benefits under Contracts may be subject to the terms and conditions of
the plans themselves, regardless of the terms and conditions of the
Contracts issued in connection with such a plan. The ultimate effect of
federal income taxes on the amounts held under a Contract, on annuity
payments, and on the economic benefit to the Contract owner, the
annuitant, or the beneficiary may depend on the tax status of the
individual concerned. Some retirement plans are subject to distribution
and other requirements that are not incorporated in the administration
of the Contracts. Owners are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts satisfy applicable law. Owners, participants and
beneficiaries should consult their legal counsel and tax advisor
regarding the use of the Contract under the retirement plan.
CORPORATE PENSION AND PROFIT-SHARING AND H.R. 10 PLANS. Code
Section 401(a) permits employers to establish various types of
retirement plans for employees, and permits self-employed individuals to
establish retirement plans for themselves and their employees. These
retirement plans may permit the purchase of the contracts to accumulate
retirement savings under the plans. Adverse tax consequences to the
plan, to the participant or to both may result if this Contract is
assigned or transferred to any individual as a means to provide benefit
payments.
SECTION 403(B) PLANS. Under Code Section 403(b), payments made by
public school systems and certain tax exempt organizations to purchase
annuity contracts for their employees are excludible from the gross
income of the employee, subject to certain limitations. However, these
payments may be subject to FICA (Social Security) taxes and state income
taxes.
<PAGE>
Code Section 403(b)(11) restricts the distribution under Code
Section 403(b) annuity contracts of: (1) elective contributions made in
years beginning after December 31, 1988; (2) earnings on those
contributions; and (3) earnings in such years on amounts held as of the
last year beginning before January 1, 1989. Distribution of those
amounts may only occur upon death of the employee, attainment of age 59
1/2, separation from service, disability, or financial hardship. In
addition, income attributable to elective contributions may not be
distributed in the case of hardship.
INDIVIDUAL RETIREMENT ANNUITIES AND SIMPLIFIED EMPLOYEE PENSION
PLANS. Sections 219 and 408 of the Code permit eligible individuals to
contribute to an individual retirement program known as an Individual
Retirement Annuity or Individual Retirement Account, each hereinafter
referred to as an "IRA". IRAs are subject to limitations on the amount
that may be contributed and deducted and the time when distributions may
commence. Also, distributions from certain other types of qualified
plans may be "rolled over" on a tax-deferred basis into an IRA.
Employers may establish Simplified Employee Pension (SEP) Plans to
provide IRA contributions on behalf of their employees. The sale of a
Contract for use with an IRA may be subject to special disclosure
requirements of the Internal Revenue Service. Purchasers of a Contract
for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency.
Such purchasers will have the right to revoke their purchase within
seven days of the earlier of the establishment of the IRA or their
purchase.
DEFERRED COMPENSATION PLANS. Code Section 457 provides for certain
deferred compensation plans. These plans may be offered with respect to
service for state governments, local governments, political
subdivisions, agencies, instrumentalities and certain affiliates of such
entities, and tax exempt organizations. These plans are subject to
various restrictions on contributions and distributions. The plans may
permit participants to specify the form of investment for their deferred
compensation account. In general, all investments are owned by the
sponsoring employer and are subject to the claims of the general
creditors of the employer. Depending on the terms of the particular
plan, the employer may be entitled to draw on deferred amounts for
purposes unrelated to its Section 457 plan obligations. In general, all
amounts received under a Section 457 plan are taxable and are subject to
federal income tax withholding as wages.
RESTRICTIONS UNDER QUALIFIED CONTRACTS. Other restrictions with
respect to the election, commencement, or distribution of benefits may
apply under Qualified Contracts or under the terms of the plans in
respect of which Qualified Contracts are issued.
TAXATION OF DISTRIBUTIONS
Section 72 of the Code governs taxation of distributions from
Section 401, 403(b) and 408 retirement plans in general. For this
purpose, the assignment, pledge, or agreement to assign or pledge any
portion of the Account Value or any portion of an interest in the
retirement plan generally will be treated as a distribution. The
taxable portion of a distribution (in the form of a single sum payment
or an annuity) is taxable as ordinary income.
<PAGE>
In the case of a withdrawal, a ratable portion of the amount
received is taxable, generally based on the ratio of the "investment in
the contract" to the individual's total accrued benefit under the
retirement plan. The "investment in the contract" generally equals the
amount of any non-deductible purchase payments paid by or on behalf of
any individual. For a Contract issued in connection with retirement
plans, the "investment in the contract" will most likely be zero.
Special tax rules may be available for certain withdrawals.
Although the tax consequences may vary depending on the annuity
payment elected under the Contract, in general, only the portion of the
annuity payment that represents the amount by which the Account Value
exceeds the "investment in the contract" will be taxed; after the
"investment in the contract" is recovered, the full amount of any
additional Annuity payments is taxable. For variable annuity payment,
the taxable portion is generally determined by an equation that
establishes a specific dollar amount of each payment that is not taxed.
The dollar amount is determined by dividing the "investment in the
contract" by the total number of expected periodic payments. However,
the entire distribution will be taxable once the recipient has recovered
the dollar amount of his or her "investment in the contract". For Fixed
Annuity payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the
contract" bears to the total expected value of the Annuity payments for
the term of the payments; however, the remainder of each Annuity payment
is taxable. Once the "investment in the contract" has been fully
recovered, the full amount of any additional Annuity payments is
taxable. If Annuity payments cease as a result of an Annuitant's death
before full recovery of the "investment in the contract", consult a
competent tax advisor regarding deductibility of the unrecovered amount.
Amounts may be distributed from the Contract because of the death
of a retirement plan participant. Generally, such amounts are
includible in the income of the recipient as follows: (1) if distributed
in a lump sum, they are taxed in the same manner as a full surrender as
described above, or (2) if distributed under an Annuity Option, they are
taxed in the same manner as Annuity payments, as described above.
WITHHOLDING
Retirement distributions generally are subject to withholding for
the recipient's federal income tax liability at rates that vary
according to the type of distribution and the recipient's tax status.
Under certain circumstances, recipients generally are provided the
opportunity to elect not to have tax withheld from distributions.
Certain distributions from Section 401(a) plans and Section 403(b)
annuities are subject to mandatory federal income tax withholding.
<PAGE>
POSSIBLE CHANGES IN TAXATION
In past years, legislation has been proposed that would have
adversely modified the federal taxation of certain annuities. For
example, one such proposal would have changed the tax treatment of non-
qualified annuities that did not have "substantial life contingencies"
by taxing income as it is credited to the annuity. Although as of the
date of this Prospectus Congress is not actively considering any
legislation regarding the taxation of annuities, there is always the
possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings,
judicial decisions, etc.). Moreover, it is also possible that any
change could be retroactive (that is, effective prior to the date of the
change).
OTHER TAX CONSEQUENCES
As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with
respect to other tax situations not discussed in this Prospectus.
Further, the federal income tax consequences discussed herein reflect
MBL Life's understanding of the current law and the law may change.
Federal estate and gift tax consequences of ownership or receipt of
distributions under the Contract depend on the individual circumstances
of each Owner or recipient of a distribution. A competent tax advisor
should be consulted for further information.
OTHER CONTRACT PROVISIONS
BENEFICIARY
The Participant may select a beneficiary to receive any benefit at
death, and may change the beneficiary by proper written notice to MBL
Life.
NON-ASSIGNABILITY
To the extent permitted by law, the right to benefits or payments
under the Contract is neither assignable nor subject to the claim of any
creditor, except as may be allowed under 457 Plans.
PORTABILITY
A Participant under a 403(b) Plan who becomes employed by a new
employer which is eligible under Section 403(b) of the Code, may enter
into an annuity purchase agreement with the new employer, at no
additional charge, so that purchase payments will be continued under the
Contract by the new employer on behalf of the Participant, if the
Contract so provides and if MBL Life consents.
FAILURE OF PLAN TO QUALIFY
If a previously issued Qualified Plan fails to qualify under the
Code, MBL Life has the right, without prior notice to or consent of the
Contract Holder, to transfer any amounts held in Variable Accumulation
Accounts to the Companion Contract, and to convert any amounts of
variable annuity to a fixed annuity under the Companion Contract on the
basis of equivalence as of the date of transfer and conversion.
Thereafter, the Contract shall be considered terminated. Proof of
qualification may be required by MBL Life.
<PAGE>
DISCONTINUANCE
Purchase payments under a Contract will no longer be accepted by
MBL Life when any of the following events occurs:
(1) The Contract Holder so notifies MBL Life in writing;
(2) MBL Life so notifies the Contract Holder in writing after an
investment adviser other than Markston (or an affiliate) is
selected for the Fund. Such a notice would be sent to all
other Contract Holders participating in the Account;
(3) After receipt of an amendment or modification of the Plan, MBL
Life gives the Contract Holder written notice that the effect
of the amendment, in MBL Life's judgment based on underwriting
principles then in effect, might be detrimental to MBL Life,
and the Contract Holder and MBL Life are unable to reach a
mutual agreement within 30 days after the written notice. If
discontinuance occurs for this reason, the amendment will not
be given effect under the Contract;
Effective with any such discontinuance, no further purchase payment
will be accepted by MBL Life under the Contract. However, MBL Life will
continue to maintain Participants' existing accumulation accounts unless
otherwise requested, as explained below under "Transfer to New Funding
Agency". Discontinuance of purchase payments will have no effect on the
rights of Annuitants.
TRANSFER TO NEW FUNDING AGENCY
If MBL Life ceases to accept purchase payments, a Contract Holder
may designate a new funding agency to receive amounts to be transferred
in accordance with the following paragraphs.
With respect to a 403(b) Plan, or IRA Plan, each Participant has
the right to direct MBL Life, by proper written request to cancel his or
her accumulation account and transfer such dollar value to the new
funding agency, after deducting the administration charge. All such
transfers will be made in the aggregate and valued as of a single
transfer date, which will be 90 days after receipt by MBL Life of the
Contract Holder's notice.
With respect to a 401 or 457 Plan, the Contract Holder has the
right, with respect to all Participants, to direct MBL Life, by proper
written notice of the selection of a new funding agency, to cancel each
Participant's accumulation account and transfer such aggregate dollar
value to the new funding agency. The value of such accounts will be
determined as of the day MBL Life receives the Contract Holder's notice
at its Home Office, or any later transfer date specified in the notice.
For any Plan, the aggregate transfer payment will be paid within
seven days after the transfer date.
<PAGE>
CHANGES IN CONTRACT
MBL Life has the right, subject to compliance with the law as
currently applicable or subsequently changed, to give written notice to
the Contract Holder, at least six months in advance, of a change to be
effective on or after the fifth Contract anniversary in (1) the tables
of annuity rates, and (2) any of the charges specified in the Contract.
Participants will be informed of any such change.
Any such change which has an adverse effect on any Participant will
not apply to any amounts credited to accumulation accounts, or to any
annuities bought before the effective date of such change, except that
a change in the risk and death benefit charges may apply uniformly to
all Variable Accumulation Units, including those credited before the
effective date of the change (but not retroactively). Because the
tables of annuity rates remain in effect with respect to purchase
payments made before a change is effective, until such purchase payments
are applied on the Participant's Annuity Commencement Date, this rate
guarantee may extend many years into the future.
The Contract may also be changed in any other respect at any time
by an agreement between the Contract Holder and MBL Life, but no such
change will be made without the consent of the persons entitled to
receive benefits under the Contract, unless (1) the change will have no
adverse effect on their rights with respect to the Variable Accumulation
Account balance already credited or annuities already bought, or (2) the
change is required to comply with a law or governmental regulation or
(3) the Plan is a 457 Plan. Such persons will be informed of any such
change which materially affects their rights.
OTHER CHANGES
MBL Life reserves the right, subject to compliance with the law as
currently applicable or subsequently changed, (1) to substitute the
shares of any other registered investment company for the shares of the
Fund held by the Account, subject to prior approval by the SEC, (2) to
discontinue submitting certain matters for approval by persons having
voting rights under the Contracts, (3) to fund additional classes of
contracts through the Account, (4) to transfer assets, determined by MBL
Life to be assigned to the class of contracts to which the Contracts
belong from the Account to another separate account by withdrawing the
same percentage of each investment in the Account, with appropriate
adjustments to avoid odd lots and fractions, and (5) to operate the
Account as another form of registered investment company or unregistered
entity. Contract Holders will be given prompt notice after any action
which results in a change in the composition of the Account's assets.
TABLE OF CONTENTS
STATEMENT OF ADDITIONAL INFORMATION
Page
Services . . .. . . . . . . . . . . . . . . . . . 2
Purchase and Pricing of Account Units. . . . . . . 2
Annuity Payments . . . . . . . . . . . . . . . . . 3
Calculation of Performance Data. . . . . . . . . . 5
Additional Information . . . . . . . . . . . . . . 6
Financial Statements . . . . . . . . . . . . . . . 6
<PAGE>
MBL VARIABLE CONTRACT ACCOUNT-2
OFFERED BY
MBL LIFE
ASSURANCE CORPORATION
520 Broad Street
Newark, New Jersey 07102-3111
1-800-435-3191
DISTRIBUTOR
FIRST PRIORITY INVESTMENT CORPORATION
520 Broad Street
Newark, New Jersey 07102-3111
1-800-559-5535
INVESTMENT ADVISER
Markston Investment Management
1 North Lexington Avenue
White Plains, New York 10601-1702
(914) 761-4700
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS.
<PAGE>
. . . . . . . . . . . . . . . . . .NO POSTAGE
. . . . . . . . . . . . . . . . . . NECESSARY
. . . . . . . . . . . . . . . . . . IF MAILED
. . . . . . . . . . . . . . . . . .IN THE
. . . . . . . . . . . . . . . . . . UNITED STATES
Business Reply Mail
First Class Permit No.
Newark, NJ
Postage will be paid by Addressee
MBL Life Assurance Corporation
Pension and Investment Products
520 Broad Street - A10N
Newark, New Jersey 07102-3111
Attn: MBL Variable Contract Account-2
-------------------------------------------------------
Please send the current Statement of Additional Information
for MBL Variable Contract Account-2 to:
_________________________________________________
Name
_________________________________________________
Street
_________________________________________________
City State Zip
<PAGE>
MBL VARIABLE CONTRACT ACCOUNT-2
MBL Life Assurance Corporation
STATEMENT OF ADDITIONAL INFORMATION
April 23, 1996
This Statement of Additional Information is not a prospectus but
has been incorporated by reference into, and should be read in
conjunction with, the Prospectus of MBL Variable Contract Account-2
dated April 23, 1996. Terms not defined in this Statement of Additional
Information shall have the same meaning given to them in the
incorporated Prospectus. A copy of the Prospectus may be obtained from
Pension and Investment Products, MBL Life Assurance Corporation, 520
Broad Street, Newark, New Jersey 07102-3111, Attn: MBL VARIABLE
CONTRACT ACCOUNT-2, telephone number (201) 481-8564.
TABLE OF CONTENTS
Cross Reference to
Page Section in Prospectus
General Information and The Variable Contract
History . . . . . . . . . . . 2 Account - Organization
Services . . . . . . . . . . . 2 The Variable Contract
Account - Administration
and Distribution
Purchase and Pricing of Account
Units . . . . . . . . . . . . . 2 Accumulation Account
Annuity Payments . . . . . . . 3 Annuity
Calculation of Performance
Data . . . . . . . . . . . . . 5 Performance-Related
Information
Additional Information . . . . 6 --
Financial Statements . . . . . 6 --
<PAGE>
GENERAL INFORMATION AND HISTORY
The business history of MBL Variable Contract Account-2 (the
"Account") (previously known as Mutual Benefit Variable Contract
Account-2), is described in its prospectus.
The Depositor, MBL Life Assurance Corporation ("MBL Life"), is a
stock life insurance company and the surviving entity in the
Rehabilitation of Mutual Benefit Life Insurance Company ("Mutual Benefit
Life").
On July 16, 1991, the Superior Court of New Jersey ("Court")
entered an Order ("Order") appointing the Insurance Commissioner of the
State of New Jersey as Rehabilitator of Mutual Benefit Life, thereby
granting the Rehabilitator immediate exclusive possession and control
of, and title to, the business and assets of Mutual Benefit Life,
including those of the Account. As a separate account, the assets and
liabilities of the Account were maintained separate and apart from
Mutual Benefit Life's other assets and liabilities.
In view of the terms and conditions of the Order, on July 16, 1991,
Mutual Benefit Life, on behalf of the Account, immediately ceased
acceptance of applications for new Contracts and additional purchase
payments under existing Contracts. This cessation of additional
purchase payments under existing Contracts continued from July 16, 1991,
until the effective date of the Account's registration statement with
the Securities and Exchange Commission ("SEC"). MBL Life will not issue
new Contracts. Transfers from VCA-2 to the Companion Contract were
temporarily prohibited and restrictions were imposed on withdrawals from
the Companion Contract during the Rehabilitation Period. Payments upon
the death of the Participant continued to be made to the beneficiaries.
In accordance with the Rehabilitation Plan of Mutual Benefit Life,
as approved by the Court on January 28, 1994, certain assets and
liabilities of Mutual Benefit Life were transferred to MBL Life as of
May 1, 1994. In addition, the assets and liabilities of the Account
were transferred to a new separate account of MBL Life.
SERVICES
All administrative services of the Account are provided by MBL Life
as described in the Prospectus under the caption "The Variable Contract
Account - Administration and Distribution", except for sales services,
which are provided by First Priority Investment Corporation ("First
Priority").
PURCHASE AND PRICING OF ACCOUNT UNITS
Net Purchase Payments are allocated to a Participant's Variable
Accumulation Account under the Contract and are applied to purchase
Variable Accumulation Units. The method of calculating the Variable
Accumulation Unit and the Net Investment Factor is described in the
Account's Prospectus under the caption "Variable Accumulation Account",
and is illustrated by the following hypothetical example.
<PAGE>
Assume that July 1st and July 2nd of some year are both Valuation
Dates and that the value of a share of MBL Growth Fund, Inc. (the
"Fund") is $10.291111 on July 1st and $10.301112 on July 2nd, as of the
time of the close of trading on the New York Stock Exchange. Assume
also that there are no dividends or other distributions made by the Fund
on July 2nd and that there is no deduction for taxes. To determine the
Variable Accumulation Unit value for July 2nd, first find the ratio of
$10.301112 to $10.291111, which is 1.0009718. Then subtract from this
ratio of 1.0009718 the factor .0000101 (the daily equivalent of the
annual deduction of 0.37%). The difference of 1.0009617 is the Net
Investment Factor for July 2nd. When multiplied by the Variable
Accumulation Unit value for July 1st, it yields the unit value for July
2nd. For example, if the value for July 1st were $10.101111, the value
for July 2nd would be $10.110825, which would be rounded to $10.111 for
all purposes except in calculating the unit value for July 3rd.
ANNUITY PAYMENTS
On a Participant's Retirement Date, the value of the Variable
Accumulation Account, less any applicable premium tax, may be applied to
purchase a variable annuity. The amount of the variable annuity payment
depends upon the number and value of the Annuitant's Variable Annuity
Units. The computation of the Variable Annuity Unit value is described
in the Account's Prospectus under the caption "Variable Annuity Unit
Value".
The first annuity payment is payable on the Annuitant's Annuity
Commencement Date under the Contract. The second and subsequent annuity
payments are payable monthly thereafter.
The amount of the first variable annuity payment depends on the
amount of funds used to buy the annuity and the applicable annuity
purchase rate. Such funds are equal to the Annuitant's number of
Variable Accumulation Units multiplied by the value of such a Unit on
the fourteenth day before his or her Annuity Commencement Date, less any
applicable premium tax. The purchase rate is set out in a rate table in
the Contract and depends on the form of annuity selected, the age of the
Annuitant and any Contingent Annuitant, an assumed investment result and
a mortality assumption based on the 1951 Group Annuity Mortality Table
for Males.
The amount of the second and subsequent variable annuity payments
depends on the number and value of the Annuitant's Variable Annuity
Units. The number of Variable Annuity Units credited to an Annuitant is
determined by dividing the dollar amount of the Annuitant's first
variable annuity payment by the value of a Variable Annuity Unit for the
month of that payment. This number of Variable Annuity Units remains
constant. However, since the Account invests in shares of the Fund, the
dollar value of a Variable Annuity Unit and hence the dollar amount of
the variable annuity payments varies up or down from month to month,
depending on the value of the securities held by the Fund. The dollar
amount of annuity payments will not be affected by mortality experience
or by an increase in expenses in excess of the charges provided for in
the Contracts.
<PAGE>
The computation of the first variable annuity payment, the number
of Variable Annuity Units, the Variable Annuity Unit value, and the
second variable annuity payment may be illustrated by the following
example.
Assume that a male participant, residing in a state where there is
no premium tax, elects to buy a variable annuity on his 65th birthday
and selects a life annuity with 120 monthly payments certain. Assume
also that, 14 days before his Annuity Commencement Date, the
Participant's Variable Accumulation Account consists of 2,500.000
Variable Accumulation Units, and the Variable Accumulation Unit Value
for the fourteenth day before his Annuity Commencement Date was $11.600.
The Participant's account has a value of 2,500.000 multiplied by
$11.600 or $29,000.00, for the purpose of buying his variable annuity.
The rate of first monthly payment of variable annuity in this example is
$6.50 per $1,000 applied, so that the first payment is equal to 29.00000
multiplied by $6.50 or $188.50.
If the Variable Annuity Unit Value for the month when the annuity
is bought is $1.125, the number of Variable Annuity Units to be credited
to the Annuitant equals $188.50 divided by $1.125, or 167.56 units. The
dollar amount of each subsequent payment will be equal to 167.56
multiplied by the Variable Annuity Unit Value for the month in which the
payment is due.
To determine the dollar amount of the second variable annuity
payment, assume that the ratio of the Variable Annuity Unit value for
the fourteenth day before the first day of the second month, to the
Variable Annuity Unit value for the fourteenth day before the first day
of the first month, is 1.003780. Then the Variable Annuity Unit value
for the second month is equal to the first month's value of $1.125
multiplied by .997137 times 1.003780, which is $1.125 multiplied by
1.000906, or $1.126. Therefore, the second payment equals the number of
Variable Annuity Units (167.56) multiplied by the Variable Annuity Unit
value ($1.126) or 188.67.
<PAGE>
Calculation of Performance Data
AVERAGE ANNUAL TOTAL RETURN
(Period Ended December 31, 1995)
1 Year 5 Year 10 Year
VCA-2 34.22% 16.90% 14.31%
S & P 500 37.53% 16.55% 14.86%
Average annual total return for the one-year, five-year and ten-
year periods shown above are calculated individually for each period.
A hypothetical initial payment of $1,000 is made to the Account on the
first day of each period. No further payments are made. As of the date
of this Statement of Additional Information, the only Contract charge
applied is the charge for MBL Life's assumption of (1) expense risks
(0.25% annually), and (2) mortality risks and the provision of the
minimum death benefit (0.12% annually). Prior to January 1, 1989, a
one-time Participant enrollment fee (up to $15.00) and an annual
administration charge (up to $10.00 and up to $0.50 per purchase payment
and transfer, or 2.00% of accumulation accounts, if greater) were
deducted. These charges, although no longer in effect, are included in
the average annual total return figures illustrated, for the years that
such charges were applicable. All distributions, if any, from the Fund
are assumed to be reinvested. Each Participant is assumed to redeem the
total value of his or her Variable Accumulation Account at the end of
each period shown above for cash, rather than electing to apply the
value to purchase an annuity.
The ending redeemable value is the Variable Accumulation Account
value at the end of each period, and is calculated by multiplying the
total number of units at the end of each period by the net asset value
on the last day of the period. Although eliminated as of January 1,
1989 and no longer charged, the ending redeemable value takes into
account the annual deduction from the Participant's Variable
Accumulation Account of the $10.00 administration charge, for the years
that such charges were applicable.
The average annual total return quotations for the 1, 5, 10 year
periods ended on December 29, 1995 are computed by finding the average
annual compounded rates of return over the 1, 5, and 10 year periods
that would equate the initial amount invested to the ending redeemable
value.
The calculation does not take into account any sales charge which
would have been deducted from the purchase payment, if made prior to
January 1, 1989. The inclusion of the sales charge in the calculation
would have reduced the average annual total return illustrated for each
period. The sales charge, enrollment fee, and administration charge
provisions were deleted from all VCA-2 contracts, effective January 1,
1989. The fee and charges are no longer levied.
The performance figures shown above are compared to performance
data for the Standard and Poor's 500 Stock Index ("S & P 500"), which is
described in the Account's prospectus under the caption "Performance
Related Information".
<PAGE>
ADDITIONAL INFORMATION
This Statement of Additional Information, and the Prospectus to
which it relates, omit some information contained in the registration
statement filed with the Securities and Exchange Commission, Washington,
D.C. Copies of such information may be obtained from the Commission
upon payment of the prescribed fees.
FINANCIAL STATEMENTS
The Account incorporates by reference into this Statement of
Additional Information its audited Financial Statements and the Report
of Independent Accountants thereon contained in the 1995 Audited
Financial Statements.
The following financial statements relate to the financial position
and operations of MBL Life. As explained in the Account's Prospectus,
the value of a Contract Holder's interest under the Contracts described
herein is affected solely by the investment results of the Account. The
MBL Life financial statements should be considered by Contract Holders
only as bearing upon the ability of MBL Life to meet its obligations
under the Contract.
Copies of the Account's Financial Statements are mailed to each
Contract Holder semiannually. The Account's annual financial statements
are audited by a firm of independent accountants. The firm of Coopers
& Lybrand L.L.P. has been selected for the current fiscal year. The
Account will furnish, without charge, an additional copy of these
Audited Financial Statements upon request made to: Pension and
Investment Products, MBL Life Assurance Corporation, 520 Broad Street,
Newark, New Jersey 07102-3111, Attn: MBL VARIABLE CONTRACT ACCOUNT-2,
telephone number 1-800-435-3191.
