<PAGE>
MBL GROWTH FUND, INC.
Dear Shareholders and Variable Annuity Participants:
MBL Growth Fund returned 9.0% and 28.8% (net of expenses) during the six and
twelve month periods ending June 30, 1996. The Standard & Poor's 500 Index, a
generally accepted index of unmanaged securities unburdened by investment
company-related expenses, returned 10.1% and 26.0% respectively during the same
periods.
We are pleased to report that the Fund has maintained a successful track record
while pursuing its investment objective in a prudent, conservative manner. The
Fund's risk level, or volatility as compared to movements in stock prices,
continues to be materially lower than other funds.
The Fund's excellent performance is reflected in the five star rating given as
of July 31, 1996 to MBL Variable Contract Account-2 ("VCA-2") by Morningstar,
Inc., a widely followed mutual fund rating service. VCA-2 is a variable annuity
accumulation account that invests solely in the Fund. Morningstar's five star
rating is reserved for the top ten percent of annuity accumulation accounts with
similar investment objectives ranked according to historical risk-adjusted
performance.
In the letter that follows, Michael Mullarkey, the Fund's lead portfolio
manager, discusses some of the individual issues that affected performance
during the first six months of 1996.
On August 13, 1996, the Board of Directors declared a dividend from net
investment income of $0.13 per share and a capital gain distribution of $0.11
per share payable to shareholders of record on August 13, 1996.
The Board of Directors continues to invite you to mail your comments and
suggestions to them and thanks you for your continued support and confidence in
the Fund.
Yours sincerely,
EUGENE J. CIARKOWSKI
PRESIDENT
August 15, 1996
<PAGE>
REPORT OF THE INVESTMENT ADVISER
Dear Shareholders and Variable Annuity Participants:
During the first six months of 1996, the MBL Growth Fund posted returns of 9.0%
versus 10.1% for the Standard & Poor's 500 Index, a generally accepted index of
unmanaged securities. We hope long-term holders are pleased by the fact that the
MBL Growth Fund, after expenses, has beaten the S&P 500 Index, which is
unburdened by expenses, over a one and five year period, and that this has been
accomplished with lower risk than represented by the S&P 500 Index.
In the paragraphs that follow, we talk about holdings that materially affected
the Growth Fund's performance during the first half of 1996.
TELEDYNE probably had the greatest positive impact during the first half of the
year. It appreciated 41.5% on the back of a plan, which has received government
blessing, to merge Teledyne and Allegheny Ludlum. The initial price we paid was
only nominally higher than the per share value of its over funded pension plan.
Allegheny is a particularly well run specialty stainless steel manufacturer
which is likely to bring new economies and markets to Teledyne's prospering
specialty metals operations. Since Allegheny has an under funded pension plan,
there will also be financial synergies. While we have benefited from the
impending merger, we worry that Allegheny's basic product, stainless steel, is
coming into oversupply. As a result, we've reduced our Teledyne holdings.
Another positive performer was SHOWBIZ PIZZA TIME, appreciating 94% during the
first half of the year. ShowBiz is in the midst of a renovation of its entire
chain of restaurants, which has moved same store sales comparisons from negative
to positive. In the midst of this redo, ShowBiz' largest competitor, Discovery
Zone, went bankrupt and began to aggressively close marginal stores. This
further helped ShowBiz' comparisons. As positive same store sales approached
10%, ShowBiz earnings and cash flow swelled. And since ShowBiz has a substantial
tax loss carry forward, the bulk of the additional revenues flowed right through
to net earnings. We continue to hold ShowBiz. Its operational expertise makes it
the logical merger candidate for a slimmed down Discovery Zone that could emerge
from bankruptcy in 1997. If such a merger were to occur, it would probably
double the size of ShowBiz while reloading its tax loss carry forward.
Another positive contributor was STORAGE TECHNOLOGY, a new purchase. We bought
Storage Tek because we saw changes at the Board level that we believed would
revitalize the company. These changes included easing out both the Chief
Financial Officer and Chief Executive Officer and appointing a new team which
crafted a brilliant agreement to sell substantial quantities of leading edge
disc drives to IBM, a former competitor. Cash has swelled to $490 million and
debt is down to $160 million. Employment is down over 26% and is still dropping.
Meanwhile earnings are surging, and a good part of the investment world has yet
to realize how profound the changes in the company are.
TIMES MIRROR was another positive contributor, appreciating 28% during the first
half of the year. We believe this was due to steps taken by Mark Willes, the new
Chief Executive Officer. Willes has eliminated peripheral holdings, shifted some
management, reduced employment and bought back stock. Profitability has
responded nicely.
Another large holding, NATIONAL SERVICE INDUSTRIES, helped performance,
appreciating almost 21% during the first half, nicely outpacing the S&P 500
Index. National Service is an under leveraged, modest growth, multi-industry
company.
One of our poorer performers was REVCO. It suffered when plans to merge it with
Rite Aid were opposed by the Federal Trade Commission. We continue to hold our
position because we think it is the kind of steady grower that could do
relatively well in a slow growth economy.
2
<PAGE>
DIGITAL EQUIPMENT, another holding, suffered when it disclosed its PC business
had slowed materially in March. We had initially bought Digital because it had a
good chance of emerging as the leader in 64 bit computing. This may still be
true but we now believe it will get greater competition from Intel. As a result,
we have recently eliminated our holdings.
Sincerely,
[SIG]
MICHAEL J. MULLARKEY
Managing Director
MARKSTON INVESTMENT MANAGEMENT
August 15, 1996
3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MBL GROWTH FUND, INC.
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments -- Note E:
Common stocks (cost $24,461,536)....... $29,562,092
Preferred stocks (cost $63,491)........ 65,839
Corporate bonds (cost $479,579)........ 595,867
Short-term investments................. 11,434,096
-----------
41,657,894
Cash..................................... 24,164
Dividends and interest receivable........ 39,536
Receivable for investment securities
sold.................................... 276,164
Other assets............................. 4,832
-----------
Total Assets..................... $42,002,590
-----------
-----------
LIABILITIES
Payable for investment securities
purchased............................... $ 606,151
Payable for Fund shares redeemed......... 1,653
Accrued investment advisory fee -- Note
B....................................... 47,269
Accounts payable and accrued expenses.... 17,321
-----------
Total Liabilities................ 672,394
NET ASSETS
Capital stock -- 3,694,531 shares of
$1.00 par value capital stock
outstanding (21,000,000 shares
authorized)............................ 3,694,531
Capital paid-in.......................... 26,336,547
Accumulated undistributed net investment
income................................. 520,882
Accumulated undistributed net realized
gain from security transactions........ 5,559,044
Net unrealized appreciation of
investments............................. 5,219,192
-----------
Total Net Assets................. 41,330,196
-----------
Total Liabilities and Net
Assets.......................... $42,002,590
-----------
-----------
Net asset value, offering price, and
redemption price per share
($41,330,196 DIVIDED BY 3,694,531
shares of
capital stock outstanding)............. $11.19
-----------
-----------
</TABLE>
See notes to financial statements.
STATEMENT OF OPERATIONS
MBL GROWTH FUND, INC.
SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
Investment Income:
Dividends.............................. $ 302,940
Interest............................... 333,120
-----------
636,060
Expenses:
Investment advisory fee -- Note B...... 89,227
Custodian.............................. 34,427
Audit.................................. 13,462
Transfer agent......................... 9,852
Legal.................................. 8,564
Printing............................... 6,164
Insurance expense...................... 4,676
Directors' fees........................ 3,750
Miscellaneous.......................... 1,547
Registration and filing fees........... 354
State tax.............................. 125
-----------
172,148
-----------
Net Investment Income............ 463,912
-----------
Realized and Unrealized Gain (Loss) on
Investments -- Note E:
Net realized gain from security
transactions......................... 5,272,875
Decrease in unrealized appreciation of
investments.......................... (2,268,221)
-----------
Net Gain on Investments.............. 3,004,654
-----------
Net Increase in Net Assets Resulting
from Operations.................... $ 3,468,566
-----------
-----------
</TABLE>
4
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
MBL GROWTH FUND, INC.
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE DECEMBER 31,
30, 1996 1995
----------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS
Net investment income........................... $ 463,912 $ 951,647
Net realized gain from security transactions
($5,272,875 and $2,228,783, respectively, for
federal income tax purposes).................. 5,272,875 2,228,794
Increase (decrease) in unrealized appreciation
of investments................................ (2,268,221 ) 7,376,436
----------- ------------
Net Increase in Net Assets Resulting from
Operations................................... 3,468,566 10,556,877
----------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS -- NOTE F
Dividends from net investment income ($0 and
$.26, per share, respectively)................ 0 (950,032)
Distributions from net realized gain from
security transactions ($0 and $.68, per share,
respectively)................................. 0 (2,494,342)
----------- ------------
Total Distributions to Shareholders........... 0 (3,444,374)
----------- ------------
FROM CAPITAL SHARE TRANSACTIONS -- NOTE D
Net increase (decrease) in net assets from
capital share transactions.................... (2,289,427 ) 1,039,015
----------- ------------
Net Increase in Net Assets.................... 1,179,139 8,151,518
NET ASSETS
Beginning of period............................. 40,151,057 31,999,539
----------- ------------
End of period (including undistributed net
investment income of $520,882 and $56,970
respectively)................................. $41,330,196 $40,151,057
----------- ------------
----------- ------------
</TABLE>
See notes to financial statements.
5
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
MBL GROWTH FUND, INC.
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES VALUE
- ----------- -----------
<C> <S> <C>
COMMON STOCKS (71.53%)
AEROSPACE AND DEFENSE (5.19%)
59,400 Teledyne, Inc................. $ 2,145,825
-----------
AGRICULTURE (0.70%)
7,700 IMC Global Inc................ 289,712
-----------
BANKING AND FINANCE (4.51%)
36,400 American Express Co........... 1,624,350
3,000 Northern Trust Corp........... 173,250
2,000 Wilmington Trust Corp......... 64,500
-----------
1,862,100
-----------
BUILDING (3.78%)
9,600 Lone Star Industries, Inc..... 322,800
22,100 Morgan Products Ltd.*......... 140,887
18,500 Vulcan Materials Co........... 1,098,438
-----------
1,562,125
-----------
CHEMICALS (0.28%)
3,800 Lubrizol Corp................. 115,425
-----------
COMPUTERS AND COMPUTING (10.49%)
4,300 Digital Equipment Corp.*...... 193,500
3,500 Electronic Data Systems
Corp........................ 188,125
74,100 National Computer Systems,
Inc......................... 1,556,100
35,900 Novell, Inc.*................. 493,625
52,300 Sequent Computer Systems,
Inc.*....................... 699,513
2,400 Silicon Graphics, Inc.*....... 57,600
25,700 Storage Technology Corp.*..... 983,025
16,000 Summagraphics Corp.*.......... 52,000
8,900 Symantec Corp.*............... 111,250
-----------
4,334,738
-----------
CONGLOMERATES (4.49%)
26,900 Minnesota Mining &
Manufacturing Co............ 1,856,100
-----------
CONSUMER GOODS AND SERVICES (4.52%)
7,200 American Greetings Corp.,
Class A..................... 196,200
3,100 Hasbro, Inc................... 110,825
8,500 Mattel, Inc................... 243,312
23,900 National Service Industries,
Inc......................... 935,087
3,400 Time Warner, Inc.............. 133,450
5,400 Valspar Corp.................. 248,400
-----------
1,867,274
-----------
<CAPTION>
NUMBER
OF MARKET
SHARES VALUE
- ----------- -----------
<C> <S> <C>
FOOD AND BEVERAGES (4.69%)
6,600 Coca-Cola Co.................. $ 322,575
7,600 Quaker Oats Co................ 259,350
70,650 Showbiz Pizza Time, Inc.*..... 1,077,413
23,300 Vicorp Restaurants, Inc.*..... 279,600
-----------
1,938,938
-----------
HEALTHCARE AND MEDICAL (4.31%)
11,600 Caremark International,
Inc......................... 292,900
30,400 Cooper Companies, Inc.*....... 357,200
17,600 Shared Medical System Corp.... 1,130,800
-----------
1,780,900
-----------
INDUSTRIAL SERVICES (1.72%)
39,300 Ogden Corp.................... 712,312
-----------
INSURANCE (5.05%)
64,000 Allmerica Property & Casualty
Companies, Inc.............. 1,728,000
9,900 Argonaut Group, Inc........... 301,950
3,500 USF&G Corp.................... 57,313
-----------
2,087,263
-----------
INVESTMENT COMPANIES (2.31%)
17,300 AIM Strategic Income Fund,
Inc......................... 167,594
900 Counsellors Tandem Securities
Fund, Inc.*................. 16,425
89,300 Dean Witter Government Income
Trust....................... 770,212
-----------
954,231
-----------
OIL AND GAS (5.59%)
6,000 Amoco Corp.................... 434,250
914 Apache Corp................... 30,048
38,125 PanEnergy Corp................ 1,253,359
3,000 Petroleum Helicopters, Inc.,
voting...................... 45,000
8,100 Petroleum Helicopters, Inc.,
non-voting.................. 120,488
7,000 Piedmont Natural Gas, Inc..... 161,875
17,600 Quaker State Corp............. 264,000
-----------
2,309,020
-----------
</TABLE>
6
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS -- CONTINUED
MBL GROWTH FUND, INC.
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES VALUE
- ----------- -----------
<C> <S> <C>
PRINTING AND PUBLISHING
(2.48%)
18,800 Nelson, Thomas Inc............ $ 251,450
17,800 Times Mirror Co., Series A.... 774,300
-----------
1,025,750
-----------
REAL ESTATE INVESTMENT (2.14%)
17,168 First Union Real Estate Equity
& Mortgage Investments...... 111,592
10,700 Health Care Property
Investors, Inc.............. 361,125
37,016 IRT Property Co............... 351,652
6,100 Reading Co., Class A*......... 61,000
-----------
885,369
-----------
RETAIL TRADE (4.10%)
31,400 Burlington Coat Factory
Warehouse Corp.*............ 329,700
49,300 Revco D.S., Inc.*............. 1,177,038
3,300 Rite Aid Corp................. 98,175
895 Smith's Food & Drug Centers,
Inc., Class B............... 21,368
15,100 Universal International,
Inc.*....................... 67,950
-----------
1,694,231
-----------
TEXTILE & APPAREL (0.15%)
3,500 Oshkosh B'Gosh, Inc., Class
A........................... 63,000
-----------
UTILITIES -- ELECTRIC AND GAS
(3.16%)
21,800 Cinergy Corp.................. 697,600
6,900 Eastern Utilities Assoc....... 135,412
17,800 Noram Energy Corp............. 193,575
8,000 Northwest Natural Gas Co...... 280,000
-----------
1,306,587
-----------
UTILITIES -- TELEPHONE (0.77%)
5,401 Sprint Corp................... 226,842
3,800 360 Communications Co.*....... 91,200
-----------
318,042
-----------
<CAPTION>
NUMBER
OF MARKET
SHARES VALUE
- ----------- -----------
<C> <S> <C>
VOCATIONAL TRAINING (1.10%)
31,800 National Education Corp.*..... $ 453,150
-----------
Total Common Stocks........... 29,562,092
-----------
PREFERRED STOCKS (0.16%)
AEROSPACE AND DEFENSE (0.09%)
2,328 Teledyne, Inc., Series E...... 35,939
-----------
CONSUMER GOODS AND SERVICES
(0.07%)
2,600 Craig Corp., Class A*......... 29,900
-----------
Total Preferred Stocks........ 65,839
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
CORPORATE BONDS (1.44%)
INSURANCE (0.28%)
$ 129,000 CII Financial, Inc., 7.50%
conv. sub. deb., due
September 15, 2001.......... 117,067
-----------
VOCATIONAL TRAINING (1.16%)
570,000 National Education Corp.,
6.50% conv. sub. deb., due
May 15, 2011................ 478,800
-----------
Total Corporate Bonds......... 595,867
-----------
SHORT-TERM INVESTMENTS
(27.67%)
11,505,000 U.S. Treasury Bills, 4.95% to
5.01%, due July 25 to August
22, 1996.................... 11,434,096
-----------
Total Investments (100.80%)... 41,657,894
-----------
Liabilities, less cash,
receivables and other assets
(-0.80%).................... (327,698)
-----------
Net Assets (100.00%).......... $41,330,196
-----------
-----------
</TABLE>
- ---------
* Non-income producing security.
The percentage shown for each investment category is the total value of that
category expressed as a percentage of the total net assets of the Fund.
See notes to financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MBL GROWTH FUND, INC. (UNAUDITED)
NOTE A -- ACCOUNTING POLICIES
MBL Growth Fund, Inc. (the "Fund") is a diversified, open-end, management
investment company registered under the Investment Company Act of 1940, as
amended.
The Fund functions as the investment vehicle for certain variable contract
accounts of MBL Life Assurance Corporation ("MBL Life") which are unit
investment trusts ("Separate Accounts") registered under the Investment Company
Act of 1940, as amended. Significant accounting policies of the Fund are as
follows:
INVESTMENTS: Investments, except for short-term investments which are stated at
amortized cost, which approximates market value, are valued at closing prices on
national securities exchanges. Securities traded on a national securities
exchange for which there are no sales on the valuation date and securities
traded over-the-counter, are valued at closing bid prices. Investment security
transactions are recorded on the date of purchase or sale. Realized gains and
losses on investment transactions are determined on the basis of identified
cost.
FEDERAL INCOME TAXES: The Fund does not provide for federal income taxes since
it intends to continue to qualify as a "regulated investment company" under the
Internal Revenue Code and to maintain this qualification by distributing each
year substantially all of its taxable net income and net realized capital gains
to its shareholders.
DIVIDENDS: Dividends receivable on investment securities and dividends payable
to shareholders are recorded on the ex-dividend date.
ESTIMATES: The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
NOTE B -- INVESTMENT ADVISORY AND SERVICE AGREEMENTS
The Fund has an investment advisory and a service agreement with Markston
Investment Management ("Adviser"), a partnership between Markston International,
Inc. ("Markston") and MBL Sales Corporation ("MBL Sales"). Markston is a 49%
general partner of Adviser, and MBL Sales is a 51% general partner. MBL Sales is
a wholly-owned subsidiary of MBLLAC Holding Corporation, which is a wholly-owned
subsidiary of MBL Life. Under the investment advisory and service agreements,
the Fund pays Adviser a periodic fee (basic fee) at the annual rate of .50% of
the first $200,000,000 of the Fund's total net assets, .45% of the next
$100,000,000 of such value, .40% of the next $100,000,000 of such value, and
.35% of such value in excess of $400,000,000. The basic fee may be adjusted by
an amount determined according to a formula based on the Fund's performance in
relation to the Standard & Poor's 500 Index ("Index"). The formula provides for
a weekly increase or decrease in the basic fee by an amount equal to .05% per
annum for each full two percentage points that the Fund's investment
performance, over a 24-month period, is better or worse than that of the Index.
The maximum adjustment is .30%. The fee is computed and accrued daily and paid
quarterly. Based on the formula, for the 24-month period ended June 30, 1996,
the Fund's investment performance was 5.72 percentage points worse than that of
the Index, resulting in a downward adjustment to the basic fee of 0.10%.
8
<PAGE>
NOTE B -- INVESTMENT ADVISORY AND SERVICE AGREEMENTS -- CONTINUED
In the event operating expenses of the Fund, exclusive of taxes and interest,
but including the investment advisory fee, exceed 1.5% of the first $30,000,000
of the Fund's average daily net asset value and 1% of the Fund's average daily
net asset value in excess of $30,000,000 for any fiscal year related thereto,
Adviser will reimburse the Fund promptly after the end of the fiscal year for
such excess. No reimbursement was required for the period ended June 30, 1996.
In addition, the Fund has a distribution agreement with First Priority
Investment Corporation ("FPIC") a wholly-owned subsidiary of MBLLAC Holding
Corporation.
The compensation of each disinterested director is paid by the Fund at the rate
of $400 per meeting attended, plus an annual retainer of $900. Aggregate fees
paid during the period to the Fund's disinterested directors amounted to $2,550.
Two of the directors of the Fund and all officers of the Fund are either
officers or employees of MBL Life. The compensation of the directors and
officers and any employees of the Fund affiliated with Adviser or FPIC is paid
by the affiliated entities.
NOTE C -- RELATED PARTY TRANSACTIONS
At June 30, 1996, MBL Life owned 66,395 Fund shares. In addition, 3,628,136 Fund
shares are held by MBL Life Separate Accounts, for the benefit of variable
annuity contract holders.
On April 29, 1994, the Third Amended Plan of Rehabilitation of the Mutual
Benefit Life Insurance Company in Rehabilitation ("Mutual Benefit Life") was
implemented. Substantially all of the assets and liabilities of Mutual Benefit
Life, including Mutual Benefit Life's investment in the Fund, were transferred
to MBL Life. In addition, the assets and liabilities of the Separate Accounts
which invest in the Fund were transferred to new separate accounts of MBL Life.
Effective May 1, 1996 MBL Variable Contract Account-2 began accepting additional
deposits under existing contracts which, in turn, were invested in the Fund.
NOTE D -- CAPITAL STOCK
A summary of capital share transactions follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, Year Ended December 31,
1996 1995
------------------------- -------------------------
Shares Amount Shares Amount
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold...................................... 8,697 $ 89,774 0 $ 0
Shares issued in reinvestment of income dividends
and capital gain distributions.................. 0 0 347,421 3,444,374
---------- ------------- ---------- -------------
8,697 89,774 347,421 3,444,374
Less shares repurchased.......................... (222,155) (2,379,201) (266,102) (2,405,359)
---------- ------------- ---------- -------------
Net increase (decrease) in number of shares
outstanding and net assets resulting from
capital share transactions...................... (213,458) $ (2,289,427) 81,319 $ 1,039,015
---------- ------------- ---------- -------------
---------- ------------- ---------- -------------
</TABLE>
9
<PAGE>
NOTE E -- PURCHASES AND SALES OF INVESTMENTS
Purchases and proceeds from sales of investments during the period ended June
30, 1996, other than short-term investments, aggregated $11,798,822 and
$14,551,244, respectively.
The identified cost of investments owned at June 30, 1996 for federal income tax
purposes was $36,438,702. At June 30, 1996, gross unrealized appreciation of
investments was $6,393,666, and gross unrealized depreciation of investments was
$1,174,474 resulting in net unrealized appreciation of $5,219,192, for federal
income tax purposes.
NOTE F -- DISTRIBUTIONS AND DIVIDENDS
A capital gain distribution and income dividend of $0.11 and $0.13 per share,
respectively, was declared by the Board of Directors on August 13, 1996 and paid
on August 14, 1996 to shareholders of record on August 13, 1996.
- -------------------------------------------------------------------------------
10
<PAGE>
FINANCIAL HIGHLIGHTS
MBL GROWTH FUND, INC.
(UNAUDITED)
Selected data for each share of capital stock outstanding throughout the periods
indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------
1996 1995 1994 1993 1992 1991
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $ 10.27 $ 8.36 $ 9.55 $ 9.36 $ 11.00 $ 15.45
Net investment income.................................... 0.13 0.26 0.21 0.17 0.31 0.66
Net realized and unrealized gain (loss) on investments... 0.79 2.59 (0.01) 1.10 1.25 2.72
----------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets from operations.... 0.92 2.85 0.20 1.27 1.56 3.38
Dividends from net investment income..................... -- (0.26) (0.21) (0.17) (0.31) (0.66)
Distributions from net realized gain from security
transactions........................................... -- (0.68) (1.18) (0.91) (2.89) (7.17)
----------- --------- --------- --------- --------- ---------
Total distributions...................................... -- (0.94) (1.39) (1.08) (3.20) (7.83)
----------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period........................... $ 11.19 $ 10.27 $ 8.36 $ 9.55 $ 9.36 $ 11.00
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Total Return............................................. 8.96% 34.75% 2.13% 13.77% 14.67% 22.71%
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Ratios/Supplemental Data:
Net Assets, End of Period (thousands).................... $ 41,330 $ 40,151 $ 32,000 $ 35,864 $ 33,685 $ 37,523
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Ratio of Expenses to Average Net Assets.................. 0.42% 0.86% 1.13% 1.20% 0.99% 0.57%
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Ratio of Net Investment Income to Average Net Assets..... 1.13% 2.73% 2.15% 1.67% 2.39% 3.26%
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
Portfolio Turnover Rate.................................. 40.78% 47.49% 78.29% 47.46% 48.10% 33.74%
----------- --------- --------- --------- --------- ---------
----------- --------- --------- --------- --------- ---------
<CAPTION>
1990 1989 1988 1987
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $ 17.18 $ 14.06 $ 11.69 $ 14.28
Net investment income.................................... 0.56 0.44 0.46 0.41
Net realized and unrealized gain (loss) on investments... (1.46) 3.57 2.735 (0.45)
--------- --------- --------- ---------
Net increase (decrease) in net assets from operations.... (0.90) 4.01 3.195 (0.04)
Dividends from net investment income..................... (0.58) (0.47) (0.44) (0.59)
Distributions from net realized gain from security
transactions........................................... (0.25) (0.42) (0.385) (1.96)
--------- --------- --------- ---------
Total distributions...................................... (0.83) (0.89) (0.825) (2.55)
--------- --------- --------- ---------
Net Asset Value, End of Period........................... $ 15.45 $ 17.18 $ 14.06 $ 11.69
--------- --------- --------- ---------
--------- --------- --------- ---------
Total Return............................................. -5.33% 28.51% 27.61% -2.10%
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratios/Supplemental Data:
Net Assets, End of Period (thousands).................... $ 59,108 $ 56,805 $ 40,166 $ 31,506
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of Expenses to Average Net Assets.................. 0.68% 1.06% 0.94% 0.73%
--------- --------- --------- ---------
--------- --------- --------- ---------
Ratio of Net Investment Income to Average Net Assets..... 3.62% 2.80% 3.39% 3.05%
--------- --------- --------- ---------
--------- --------- --------- ---------
Portfolio Turnover Rate.................................. 7.11% 14.69% 19.43% 18.81%
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See notes to financial statements.
11
<PAGE>
RECORD OF PERFORMANCE (UNAUDITED)
The primary investment objective of MBL Growth Fund, Inc. is long-term
appreciation of capital. This can only be achieved over a period of time. The
performance of the Fund should not be judged over the short-term, but should be
considered in light of its investment policies and objectives. Following is a
tabular illustration of the Fund's history since shares of the Fund were first
offered for sale on December 17, 1982.
<TABLE>
<CAPTION>
Per Share
----------------------------
<S> <C> <C> <C>
Dividends
Net asset from net Capital
value investment gains
Period ended per share income distributions
- -------------------------------------------------------------
December 31, 1982 $ 10.30 -- --
December 31, 1983 12.67 $ .15 $ .05
December 31, 1984 11.20 .51 1.11
December 31, 1985 12.73 .46 .99
December 31, 1986 14.28 .38 .61
December 31, 1987 11.69 .59 1.96
December 31, 1988 14.06 .44 .385
December 31, 1989 17.18 .47 .42
December 31, 1990 15.45 .58 .25
December 31, 1991 11.00 .66 7.17
December 31, 1992 9.36 .31 2.89
December 31, 1993 9.55 .17 .91
December 31, 1994 8.36 .21 1.18
December 31, 1995 10.27 .26 .68
June 30, 1996 11.19 -- --
- -------------------------------------------------------------
</TABLE>
PORTFOLIO CHANGES (UNAUDITED)
For the period ended June 30, 1996:
INVESTMENTS ADDED
AIM Strategic Income Fund, Inc.
Amoco Corp.
Burlington Coat Factory Warehouse Corp.
Counsellors Tandem Securities Fund, Inc.
Dean Witter Government Income Trust
Electronic Data Systems Corp.
IMC Global, Inc.
Nelson, Thomas Inc.
Novell, Inc.
Revco D.S., Inc.
Sequent Computer Systems, Inc.
Silicon Graphics, Inc.
Storage Technology Corp.
Symantec Corp.
360 Communications Co.
Vicorp Restaurants, Inc.
INVESTMENTS ELIMINATED
CCH, Inc. (Classes A and B)
Cray Research, Inc.
Emerging Tigers Fund, Inc.
Global Government Plus Fund, Inc.
Global Total Return Fund, Inc.
Grossman's, Inc.
Intel Corp.
NextHealth, Inc.
Rhone-Poulenc Rorer, Inc.
Western Gas Resources, Inc.
12
<PAGE>
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<PAGE>
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<PAGE>
MBL GROWTH FUND, INC.
520 Broad Street
Newark, New Jersey 07102-3111
1-800-559-5535
FUND DIRECTORS
Eugene J. Ciarkowski
Horace J. DePodwin
Herbert M. Groce Jr.
Kathleen M. Koerber
Jerome M. Scheckman
INVESTMENT ADVISER
Markston Investment Management
1 North Lexington Avenue
White Plains, New York 10601-1702
DISTRIBUTOR
First Priority Investment Corporation
520 Broad Street
Newark, New Jersey 07102-3111
1-800-559-5535
CUSTODIAN and TRANSFER AGENT
State Street Bank & Trust Co.
P.O. Box 8500
Boston, Massachusetts 02266-8500
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
THIS REPORT HAS BEEN PREPARED FOR THE SHAREHOLDERS OF THE FUND. IT IS NOT
AUTHORIZED FOR OTHER DISTRIBUTION UNLESS PRECEDED OR ACCOMPANIED BY A CURRENT
PROSPECTUS, WHICH INCLUDES ADDITIONAL INFORMATION ABOUT THE FUND.
FS-629 (8-96)
15152
Semiannual Report
June 30, 1996
MBL GROWTH FUND, INC.
Distributed by
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