<PAGE>
MBL GROWTH FUND, INC.
To Our Shareholders and Variable Annuity Participants:
The U.S. equity markets continued to benefit during the first six months of 1997
from a powerful combination of favorable economic factors, including strong
economic growth, low inflation and stable interest rates. The Standard & Poor's
500 Index, a generally accepted index of unmanaged securities, increased by
20.6% during the first half of 1997, following increases of 23.0% and 37.5%
during 1996 and 1995, respectively.
SOLID RISK-ADJUSTED PERFORMANCE
MBL Growth Fund participated in this overall market increase, gaining 20.3%
during the first six months of 1997. The Fund produced this result while
maintaining a lower risk profile than the overall market and staying away from
many of the large capitalization stocks that have reached record valuations in
the recent market rally. Markston Investment Management continues to adjust the
portfolio to react to new opportunities in the market while seeking to minimize
the Fund's volatility.
In the letter that follows, Michael Mullarkey, the Fund's lead portfolio
manager, discusses some of the Fund's better and poorer performers of the first
half of 1997.
CONTINUED RECOGNITION
The Fund is the underlying investment vehicle for variable annuity contracts
offered by MBL Life Assurance Corporation. I am pleased to report that
MORNINGSTAR, INC., the widely recognized mutual fund rating service, awarded MBL
Variable Contract Account-2 ("VCA-2"), the primary variable annuity investing in
the Fund, its highest five-star (*****) rating during 1997, based on VCA-2's
total return.(1)
ORGANIZATIONAL CHANGES
In February, Eugene Ciarkowski, who was President and a Director of MBL Growth
Fund, retired. Gene, who was affiliated with the Fund since its inception in
1982, will be missed greatly. We wish him well in all his future endeavors. I
have assumed Gene's responsibilities as President, and William Clark, President
of First Priority Investment Corporation, has been elected a Director.
The Board of Directors invites your suggestions and comments, and appreciates
your continued support and confidence in the Fund.
Sincerely,
[SIG]
KATHLEEN M. KOERBER
PRESIDENT
August 15, 1997
- ---------
(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>
REPORT OF THE INVESTMENT ADVISER
Dear Shareholders and Variable Annuity Participants:
The MBL Growth Fund returned 20.3%, after its expenses, versus 20.6% for the S&P
500 Index during the first six months of 1997. This was accomplished with a risk
level of approximately 82% of the market. Thus the Fund continued its tradition
of above average risk-adjusted performance.
Some of the stocks that helped us achieve this above average risk-adjusted
performance include Catalina Marketing, American Express, Burlington Coat
Factory, and Avid Technology.
CATALINA MARKETING, a marketing service company that distributes coupons in
supermarkets worldwide and medical newsletters in domestic pharmacies, made a
substantial contribution to performance, appreciating about 85% from our
purchase earlier in the period. We bought Catalina because it was a very high-
return-on-assets operation whose price had dropped over 50% because of a
temporary domestic slowdown and a shortfall in Mexico. We believed the company
would recover from these temporary setbacks. The company bought back over 5% of
its shares around the same time we bought, and several insiders also bought.
AMERICAN EXPRESS, one of our larger holdings, continued to contribute to
performance during the period. This was helped by the favorable trend in
interest rates and the robust stock market, both of which had a positive effect
on the company. The shares also benefited from a re-emergence of rumors that a
Citibank/ American Express merger was a real possibility. There is a certain
logic to such a combination since both companies have a large international
presence. Theoretically, a merger could accelerate international growth for the
two companies while simultaneously dropping costs. A merger might even be
favored by the government since acceptance of the American Express card by
domestic bank issuers such as Citibank might neutralize allegations of
anti-competitive behavior by Visa and MasterCard.
BURLINGTON COAT FACTORY was the third largest contributor to portfolio
performance during the period. We initially bought Burlington Coat after we saw
insider buying by two of the officers and stock repurchases by the company. The
price we paid was less than what we thought was a hard book value. At the time
we bought it there were indications that operations would improve. Management
promised that if the improvements occurred it would recommend, to the Board of
Directors, that the company pay a dividend. This would make the stock attractive
to a larger group of professional investors. Operations improved more
substantially than we had expected and the stock appreciated.
Shares of AVID TECHNOLOGY, another large holding, doubled in the quarter. We
bought Avid for several reasons. As a leading supplier of computerized video
editing systems, it clearly is in the path of history as the price of personal
computers drops. A strategic investment by Intel in Avid also assured us that
the company would have substantial help in moving its software from the Apple
Macintosh to the ultimately more promising Intel X86 architecture. The X86 will
be enhanced in late 1997 with an accelerated graphics port and in late 1998 with
a 64-bit processor (The Merced). Both will accelerate graphics applications on
the X86. Aside from these factors, a new CEO, Bill Miller from Quantum, a new
CFO, Bill Flaherty from Dupont, and new executives in charge of marketing and
operations have dramatically changed the culture in the company. Inventory turns
have soared, as has cash flow generation. Continued insider buying, even after
the stock appreciated, has pleased us.
2
<PAGE>
Among the portfolio's underperforming stocks was EASTMAN KODAK, which fell
slightly in value during the first half of 1997. Kodak appears to be engaged in
a mild pricing battle with Fuji. As a result of this development, as well as the
fact that George Fisher--installed as chairman to lead the company's
renewal--recently sold a substantial amount of his stock, we have materially
reduced our holdings in Kodak.
We thank you for the continuing opportunity to manage your assets.
Sincerely,
[SIG]
MICHAEL J. MULLARKEY
Managing Director
MARKSTON INVESTMENT MANAGEMENT
August 15, 1997
3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MBL GROWTH FUND, INC.
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments:
Common stocks (cost $31,313,312)................................. $45,446,479
Preferred stock (cost $30,852)................................... 40,950
Corporate bonds (cost $173,728).................................. 251,390
Short-term investments (cost $8,125,499)......................... 8,125,499
-----------
53,864,318
Cash............................................................... 6,244
Receivable for investment securities sold.......................... 349,960
Receivable for Fund shares sold.................................... 622
Dividends and interest receivable.................................. 48,287
Other assets....................................................... 3,567
-----------
Total Assets............................................... 54,272,998
-----------
LIABILITIES
Payable for investment securities purchased........................ 420,133
Payable for Fund shares redeemed................................... 2,679
Accrued investment advisory fee.................................... 74,068
Accounts payable and accrued expenses.............................. 13,823
-----------
Total Liabilities.......................................... 510,703
-----------
Net Assets................................................. $53,762,295
-----------
-----------
NET ASSETS
Capital stock (4,185,636 shares of $1.00 par value capital stock
outstanding, 21,000,000 shares authorized)....................... $ 4,185,636
Capital paid-in.................................................... 30,848,966
Accumulated undistributed net investment income.................... 337,097
Accumulated undistributed net realized gain from security
transactions..................................................... 4,169,669
Net unrealized appreciation of investments......................... 14,220,927
-----------
Net Assets................................................. $53,762,295
-----------
-----------
Net asset value, offering price, and redemption price per share
($53,762,295 DIVIDED BY 4,185,636 shares of
capital stock outstanding)....................................... $12.84
-----------
-----------
</TABLE>
See notes to financial statements.
STATEMENT OF OPERATIONS
MBL GROWTH FUND, INC.
SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
Investment Income:
Dividends......................................................... $ 285,461
Interest.......................................................... 224,461
----------
509,922
Expenses:
Investment advisory fee........................................... 126,246
Custodian......................................................... 35,262
Audit............................................................. 12,550
Transfer agent.................................................... 9,721
Legal............................................................. 9,067
Printing.......................................................... 4,291
Insurance expense................................................. 4,102
Directors' fees................................................... 3,750
Miscellaneous..................................................... 1,688
Filing Fees....................................................... 674
----------
207,351
----------
Net Investment Income....................................... 302,571
----------
Realized and Unrealized Gain on
Investments:
Net realized gain from security transactions...................... 4,077,290
Increase in unrealized appreciation of investments................ 4,795,038
----------
Net Gain on Investments......................................... 8,872,328
----------
Net Increase in Net Assets Resulting from Operations............ $9,174,899
----------
----------
</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, 1997 1996
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS
Net investment income........................... $ 302,571 $ 861,048
Net realized gain from security transactions
($4,077,290 and $6,498,070, respectively, for
federal income tax purposes).................. 4,077,290 6,498,070
Increase in unrealized appreciation of
investments................................... 4,795,038 1,938,476
------------ ------------
Net Increase in Net Assets Resulting from
Operations................................... 9,174,899 9,297,594
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income ($0 and
$.24, per share, respectively)................ 0 (883,492)
Distributions from net realized gain from
security transactions ($0 and $1.82, per
share, respectively).......................... 0 (6,691,860)
------------ ------------
Total Distributions to Shareholders........... 0 (7,575,352)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Net increase (decrease) in net assets from
capital share transactions.................... (1,404,147) 4,118,244
------------ ------------
Net Increase in Net Assets.................... 7,770,752 5,840,486
NET ASSETS
Beginning of period............................. 45,991,543 40,151,057
------------ ------------
End of period (including undistributed net
investment income of $337,097 and $34,526,
respectively)................................. $53,762,295 $45,991,543
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
5
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
MBL GROWTH FUND, INC.
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS (84.53%)
AGRICULTURE (0.50%)
7,700 IMC Global, Inc........................................ $ 269,500
-----------
BANKING AND FINANCE (4.76%)
29,200 American Express Co.................................... 2,175,400
6,000 Northern Trust Corp.................................... 290,250
2,000 Wilmington Trust Corp.................................. 91,500
-----------
2,557,150
-----------
BUILDING (5.39%)
10,900 Lone Star Industries, Inc.............................. 493,906
22,600 Morgan Products Ltd.*.................................. 169,500
28,500 Vulcan Materials Co.................................... 2,237,250
-----------
2,900,656
-----------
CHEMICALS (0.88%)
2,300 Lubrizol Corp.......................................... 96,456
12,800 Valspar Corp........................................... 379,200
-----------
475,656
-----------
COMPUTERS AND COMPUTING (7.50%)
2,800 Adobe Systems, Inc..................................... 98,175
42,000 Avid Technology, Inc.*................................. 1,107,750
8,800 Bay Networks, Inc.*.................................... 233,750
6,700 Calcomp Technology, Inc.*.............................. 12,772
7,500 Electronic Data Systems Corp........................... 307,500
7,490 Imation Corp.*......................................... 197,549
4,200 Integrated Systems, Inc.*.............................. 48,825
71,200 National Computer Systems, Inc......................... 1,895,700
300 Storage Technology Corp.*.............................. 13,350
115 Wang Laboratories, Inc., warrants*..................... 719
9,500 Xircom, Inc.*.......................................... 118,156
-----------
4,034,246
-----------
CONGLOMERATES (8.56%)
26,900 Minnesota Mining & Manufacturing Co.................... 2,743,800
22,400 National Service Industries, Inc....................... 1,090,600
35,300 Ogden Corp............................................. 767,775
-----------
4,602,175
-----------
<CAPTION>
NUMBER
OF MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
CONSUMER GOODS AND SERVICES (8.07%)
1,200 American Greetings Corp., Class A...................... $ 44,400
50,000 Catalina Marketing Corp.*.............................. 2,406,250
9,000 Eastman Kodak Co....................................... 690,750
6,650 Hasbro, Inc............................................ 188,694
16,700 Heritage Media Corp.*.................................. 315,212
8,500 Mattel, Inc............................................ 287,937
4,500 Olsten Corp............................................ 87,469
3,900 Time Warner, Inc....................................... 188,175
3,500 Tupperware Corp........................................ 127,750
-----------
4,336,637
-----------
ELECTRICAL AND ELECTRONICS (3.49%)
46,400 Checkpoint Systems, Inc.*.............................. 745,300
44,000 Glenayre Technologies, Inc.*........................... 720,500
700 Intel Corp............................................. 99,094
4,100 Motorola, Inc.......................................... 311,600
-----------
1,876,494
-----------
FOOD AND BEVERAGES (7.29%)
87,900 Archer Daniels Midland Co.............................. 2,065,650
3,400 Coca-Cola Co........................................... 229,500
3,400 Pete's Brewing Co.*.................................... 23,163
5,600 Quaker Oats Co......................................... 251,300
38,050 Showbiz Pizza Time, Inc.*.............................. 1,003,569
28,900 Vicorp Restaurants, Inc.*.............................. 346,800
-----------
3,919,982
-----------
HEALTHCARE AND MEDICAL (5.98%)
19,300 Cooper Companies, Inc.*................................ 448,725
10,536 Medpartners, Inc.*..................................... 227,841
34,000 Schering-Plough Corp................................... 1,627,750
17,000 Shared Medical System Corp............................. 913,750
-----------
3,218,066
-----------
INSURANCE (5.06%)
54,800 Allmerica Property & Casualty Companies, Inc........... 1,794,700
9,900 Argonaut Group, Inc.................................... 292,050
46,200 Reliance Group Holdings, Inc........................... 548,625
3,500 USF&G Corp............................................. 84,000
-----------
2,719,375
-----------
MACHINERY AND EQUIPMENT (0.51%)
32,000 3-D Systems Corp.*..................................... 276,000
-----------
MISCELLANEOUS (0.13%)
6,100 Reading Entertainment, Inc.*........................... 68,625
-----------
</TABLE>
6
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS -- CONTINUED
MBL GROWTH FUND, INC.
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
OIL AND GAS (1.67%)
6,000 Amoco Corp............................................. $ 521,625
914 Apache Corp............................................ 29,705
3,000 Petroleum Helicopters, Inc., voting.................... 47,250
8,100 Petroleum Helicopters, Inc.,
non-voting........................................... 121,500
7,000 Piedmont Natural Gas, Inc.............................. 179,813
-----------
899,893
-----------
PRINTING AND PUBLISHING (6.27%)
33,100 Access Health, Inc.*................................... 810,950
71,600 ACNielsen Corp.*....................................... 1,405,150
21,800 Nelson, Thomas Inc..................................... 302,475
15,400 Times Mirror Co., Series A............................. 850,850
-----------
3,369,425
-----------
REAL ESTATE INVESTMENT (2.04%)
17,168 First Union Real Estate Equity & Mortgage
Investments.......................................... 242,498
11,900 Health Care Property Investors, Inc.................... 419,475
37,016 IRT Property Co........................................ 434,938
-----------
1,096,911
-----------
RETAIL TRADE (6.60%)
78,900 Burlington Coat Factory Warehouse Corp.*............... 1,538,550
35,721 CVS Corp............................................... 1,830,701
11,456 Cash America International, Inc........................ 120,288
3,300 Mazel Stores, Inc.*.................................... 56,925
-----------
3,546,464
-----------
TEXTILE & APPAREL (3.30%)
37,200 Global Directmail Corp.*............................... 969,525
6,800 Hartmarx Corp.*........................................ 56,100
34,300 Oshkosh B'Gosh, Inc., Class A.......................... 746,025
-----------
1,771,650
-----------
<CAPTION>
NUMBER
OF MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
UTILITIES -- ELECTRIC AND GAS (6.00%)
21,800 Cinergy Corp........................................... $ 758,912
36,580 Duke Power Co.......................................... 1,753,559
6,900 Eastern Utilities Assoc................................ 125,925
17,800 Noram Energy Corp...................................... 271,450
12,000 Northwest Natural Gas Co............................... 313,500
-----------
3,223,346
-----------
UTILITIES -- TELEPHONE (0.53%)
5,401 Sprint Corp............................................ 284,228
-----------
TOTAL COMMON STOCKS.................................... 45,446,479
-----------
PREFERRED STOCK (0.08%)
CONSUMER GOODS AND SERVICES
2,600 Craig Corp., Class A*.................................. 40,950
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
<C> <S> <C>
CORPORATE BONDS (0.47%)
$ 129,000 CII Financial, Inc., 7.50% conv. sub. deb., due
September 15, 2001................................... 121,260
143,000 National Education Corp., 6.50% conv. sub. deb., due
May 15, 2011......................................... 130,130
-----------
TOTAL CORPORATE BONDS.................................. 251,390
-----------
SHORT-TERM INVESTMENTS (15.11%)
8,160,000 U.S. Treasury Bills, 4.39% to 5.05%, due July 10 to
August 21, 1997...................................... 8,125,499
-----------
TOTAL INVESTMENTS (100.19%)............................ 53,864,318
-----------
Liabilities, less cash, receivables and other assets
(-0.19%)............................................. (102,023)
-----------
NET ASSETS (100.00%)................................... $53,762,295
-----------
-----------
</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 annuity
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 approximate 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 investment advisory and service agreements 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 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% of net assets
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. For the period ended June 30, 1997, the basic advisory fee amounted
to $118,904. The actual fee amounted to $126,246 which reflected an upward
performance adjustment of $7,342.
8
<PAGE>
NOTE B -- INVESTMENT ADVISORY AND SERVICE AGREEMENTS -- CONTINUED
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 $3,750.
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, 1997, MBL Life owned 80,096 Fund shares. In addition, 4,105,540 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,
1997 1996
------------------------- -------------------------
Shares Amount Shares Amount
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold...................................... 12,589 $ 140,434 46,710 $ 504,068
Shares issued in reinvestment of income dividends
and capital gain distributions.................. 0 0 713,719 7,575,352
---------- ------------- ---------- -------------
12,589 140,434 760,429 8,079,420
Less shares repurchased.......................... (134,103) (1,544,581) (361,268) (3,961,176)
---------- ------------- ---------- -------------
Net increase (decrease) in number of shares
outstanding and net assets resulting from
capital share transactions...................... (121,514) $ (1,404,147) 399,161 $ 4,118,244
---------- ------------- ---------- -------------
---------- ------------- ---------- -------------
</TABLE>
9
<PAGE>
NOTE E -- PURCHASES AND SALES OF INVESTMENTS
Purchases and proceeds from sales of investments during the period ended June
30, 1997, other than short-term investments, aggregated $14,918,194 and
$16,910,448, respectively.
The identified cost of investments owned at June 30, 1997 for federal income tax
purposes was $39,643,391. At June 30, 1997, gross unrealized appreciation of
investments was $14,666,461, and gross unrealized depreciation of investments
was $445,534 resulting in net unrealized appreciation of $14,220,927, for
federal income tax purposes.
NOTE F -- DISTRIBUTIONS AND DIVIDENDS
A capital gain distribution and income dividend of $0.04 and $0.08 per share,
respectively, was declared by the Board of Directors on August 11, 1997, and
paid on August 12, 1997 to shareholders of record on August 11, 1997.
- -------------------------------------------------------------------------------
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, -----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $10.68 $10.27 $ 8.36 $ 9.55 $ 9.36 $11.00 $15.45 $17.18 $14.06 $11.69
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Net investment income......... 0.07 0.23 0.26 0.21 0.17 0.31 0.66 0.56 0.44 0.46
Net realized and unrealized
gain (loss) on
investments................. 2.09 2.24 2.59 (0.01) 1.10 1.25 2.72 (1.46) 3.57 2.735
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Net increase (decrease) in net
assets from operations...... 2.16 2.47 2.85 0.20 1.27 1.56 3.38 (0.90) 4.01 3.195
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Dividends from net investment
income...................... -- (0.24) (0.26) (0.21) (0.17) (0.31) (0.66) (0.58) (0.47) (0.44)
Distributions from net
realized gain from security
transactions................ -- (1.82) (0.68) (1.18) (0.91) (2.89) (7.17) (0.25) (0.42) (0.385)
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Total distributions........... -- (2.06) (0.94) (1.39) (1.08) (3.20) (7.83) (0.83) (0.89) (0.825)
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Net Asset Value, End of
Period...................... $12.84 $10.68 $10.27 $ 8.36 $ 9.55 $ 9.36 $11.00 $15.45 $17.18 $14.06
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Total Return.................. 20.22% 24.57% 34.75% 2.13% 13.77% 14.67% 22.71% -5.33% 28.51% 27.61%
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Ratios/Supplemental Data:
Net Assets, End of Period
(thousands)................... $53,762 $45,992 $40,151 $32,000 $35,864 $33,685 $37,523 $59,108 $56,805 $40,166
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Ratio of Expenses to Average
Net Assets.................. 0.43% 0.83% 0.86% 1.13% 1.20% 0.99% 0.57% 0.68% 1.06% 0.94%
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Ratio of Net Investment Income
to Average Net Assets....... 0.62% 2.07% 2.73% 2.15% 1.67% 2.39% 3.26% 3.62% 2.80% 3.39%
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Portfolio Turnover Rate....... 35.97% 65.37% 47.49% 78.29% 47.46% 48.10% 33.74% 7.11% 14.69% 19.43%
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
Average Commission Rate
Paid........................ $0.0254 $0.0250 -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- -------- ---------
</TABLE>
See notes to financial statements.
11
<PAGE>
NET ASSET VALUES AND PAYOUTS (UNAUDITED)
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
----------------------------
Dividends
Net asset from net Capital
value investment gains
Period ended per share income distributions
<S> <C> <C> <C>
- ---------------------------------------------------------
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
December 31,
1996 10.68 .24 1.82
June 30, 1997 12.84 -- --
- ---------------------------------------------------------
</TABLE>
PORTFOLIO CHANGES (UNAUDITED)
For the period ended June 30, 1997:
INVESTMENTS ADDED
Access Health, Inc.
ACNielsen Corp.
Adobe Systems, Inc.
Archer Daniels Midland Co.
Avid Technology, Inc.
Bay Networks, Inc.
Catalina Marketing Corp.
Checkpoint Systems, Inc.
CVS Corp.
Duke Power Co.
Glenayre Technologies, Inc.
Global Directmail Corp.
Hartmarx Corp.
Heritage Media Corp.
Integrated Systems, Inc.
Mazel Stores, Inc.
Olsten Corp.
Pete's Brewing Co.
Reliance Group Holdings, Inc.
Schering-Plough Corp.
3-D Systems Corp.
Tupperware Corp.
Wang Laboratories, Inc. (warrants)
Xircom, Inc.
INVESTMENTS ELIMINATED
Allegheny Teledyne, Inc.
Avnet Inc.
Data General Corp.
Dean Witter Government Income Trust
National Education Corp.
Novell, Inc.
PanEnergy Corp.
Quaker State Corp.
Quest for Value Dual Purpose Fund, Inc.
(income and capital shares)
Revco D.S., Inc.
Sequent Computer Systems, Inc.
Symantec Corp.
360 Communications Co.
Universal International, Inc.
12
<PAGE>
MBL GROWTH FUND, INC.
520 Broad Street
Newark, New Jersey 07102-3111
1-800-559-5535
FUND DIRECTORS
William G. Clark
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 (8-97)
15152
Semiannual Report
June 30, 1997
MBL GROWTH FUND, INC.
Distributed by
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