<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, 1997 was $173.148, versus a value of $144.176 on
December 31, 1996. This represents a 20.1% increase for the six-month period.
The Standard & Poor's 500 Stock Index, a generally accepted market index of
unmanaged securities, increased 20.6% during the same period.
Morningstar, Inc., the widely recognized independent fund rating company,
recently gave the Account its highest rating, five-stars, for the 66 month
period ending June 30, 1997.(1) In addition, the Account was the top performing
account for the past one year period out of 138 accounts in the mid-cap blend
equity growth category.
The Account invests exclusively in MBL Growth Fund (the "Fund"). The
accompanying semi-annual 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 quality investment
management and superior customer service.
Following are the unaudited financial statements of the Account as of, and for
the six month period ended, June 30, 1997.
Sincerely,
[SIG]
William G. Clark
Senior Vice President
Pension and Investment Products
MBL Life Assurance Corporation
(1) Morningstar's rating reflects historical risk-adjusted performance as of
June 30, 1997. The rating is subject to change each month. Past performance is
no guarantee of future results. Morningstar ratings are calculated from the
Account's 1, 3, and 5 year average annual risk- and fee-adjusted performance.
These ratings compare Accounts with similar investment objectives. For the
1-year rating, the Account was compared with 3,506 Accounts, for the 3-year
rating, 2,414 Accounts, and for the 5-year rating, 1,550 Accounts. The top 10%
of the Accounts in an investment category receive five stars, the next 22.5%
receive four stars, the next 35% receive three stars, the next 22.5% receive two
stars, and the remaining 10% receive one star. For a copy of the current
Morningstar report, please call your Customer Service Representative at MBL Life
Assurance Corporation, 1-800-435-3191.
<PAGE>
MBL VARIABLE CONTRACT ACCOUNT -- 2
STATEMENT OF ASSETS AND LIABILITY
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in MBL Growth Fund, Inc.
3,832,375 shares at net asset value of $12.84 per share
(cost -- $42,989,922)................................................... $49,207,693
LIABILITY
Due to MBL Life -- Note C................................................. 220,634
-----------
Net assets................................................................ $48,987,059
-----------
-----------
NET ASSETS ATTRIBUTABLE TO VARIABLE ANNUITY CONTRACT HOLDERS
281,430 variable accumulation units at value
of $173.148 per unit................................................ $48,729,039
Variable annuity reserves -- Note A..................................... 258,020
-----------
$48,987,059
-----------
-----------
</TABLE>
See notes to financial statements.
2
<PAGE>
MBL VARIABLE CONTRACT ACCOUNT -- 2
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Investment expenses -- Note C:
Risk and death benefit charges........................................... $ 82,269
----------
Net investment loss................................................ 82,269
----------
Realized and unrealized gain on investments -- Note D:
Net realized gain on sales of investments................................ 36,990
Net change in unrealized appreciation/depreciation of investments........ 8,333,818
----------
Net gain on investments............................................ 8,370,808
----------
Net increase in net assets resulting from operations....................... $8,288,539
----------
----------
</TABLE>
See notes to financial statements.
3
<PAGE>
MBL VARIABLE CONTRACT ACCOUNT -- 2
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER 31,
1997 1996
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS
Net investment income (loss).............................................. $ (82,269) $ 6,772,459
Net realized gain (loss) on sales of investments.......................... 36,990 (74,893)
Net change in unrealized appreciation/depreciation of
investments.............................................................. 8,333,818 1,647,592
-------------- --------------
Net increase in net assets resulting from operations.................... 8,288,539 8,345,158
-------------- --------------
FROM CONTRACT HOLDERS' TRANSACTIONS -- NOTE B
Net purchase payments..................................................... 133,230 18,452
Accumulation units surrendered............................................ (1,123,764) (2,510,082)
Annuity payments.......................................................... (15,275) (25,838)
-------------- --------------
Decrease in net assets resulting from Contract Holders' transactions.... (1,005,809) (2,517,468)
-------------- --------------
Increase in amount due MBL Life resulting from investment activities and
mortality gains and losses -- Note C.................................... (7,197) (50,248)
-------------- --------------
Net increase in net assets.............................................. 7,275,533 5,777,442
Net assets
Beginning of period....................................................... 41,711,526 35,934,084
-------------- --------------
End of period............................................................. $ 48,987,059 $ 41,711,526
-------------- --------------
-------------- --------------
</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 (see Note B). 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 April 29, 1994, the Third Amended Plan of Rehabilitation (the
"Plan") of Mutual Benefit Life Insurance Company in Rehabilitation ("Mutual
Benefit Life") was implemented. The Plan, as confirmed by the Superior Court of
New Jersey, reaffirmed the status of the Account as a separate account. Pursuant
to the terms of the Plan, 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 New Jersey Commissioner of Banking and
Insurance is the sole Trustee. Pursuant to the terms of a Settlement Agreement
between MBL Life and the Class Four Creditors, as identified in the Plan, Class
Four Creditors and eligible Policyholders/Contract Holders who remain with MBL
Life after the end of the rehabilitation period (December 31, 1999) will share
in the future value of MBL Life. The sharing will be based on a ratio of 70% to
the Class Four Creditors and 30% to eligible Policyholders/Contract Holders. If
MBL Life does not meet its capital growth projections, the Policyholder/Contract
Holder share may be reduced below 30%.
The Plan permits redemptions of amounts from the Account to continue, as
requested. 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. While both deposits and
transfers from other separate accounts of MBL Life, for the purchase of variable
5
<PAGE>
annuities, may be made to the Account by participants under existing contracts,
applications for new contracts are not being accepted. The terms of the Plan
currently prohibit or limit redemptions from the Companion Contract and
transfers between the Account and the Companion Contract.
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, 1997 amounted to $122,561 and $1,269,014,
respectively.
The net realized gain on sales of investments was calculated as follows:
<TABLE>
<S> <C>
Proceeds from sales of investments.......................... $ 1,269,014
Cost of investments sold.................................... 1,232,024
-----------
Net realized gain on investments.......................... $ 36,990
-----------
-----------
</TABLE>
The net change in unrealized appreciation/depreciation of investments was
calculated as follows:
<TABLE>
<S> <C>
Unrealized appreciation (depreciation) of investments:
Beginning of period....................................... $(2,116,047)
End of period............................................. 6,217,771
-----------
Net change in unrealized appreciation/depreciation of
investments............................................. $ 8,333,818
-----------
-----------
</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,
1997 1996
----------- ---------------
<S> <C> <C>
Balance at beginning of period................... 287,783 307,509
Net units purchased.............................. 881 192
Accumulation units surrendered................... (7,234) (19,918)
----------- -------
Balance at end of period......................... 281,430 287,783
----------- -------
----------- -------
</TABLE>
6
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
7
<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 (8-97)
Semiannual Report
June 30, 1997
MBL VARIABLE
CONTRACT ACCOUNT -- 2
Group Variable Annuity Contracts
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