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MERRILL LYNCH LIFE INSURANCE COMPANY
MERRILL LYNCH LIFE VARIABLE LIFE SEPARATE ACCOUNT II
SUPPLEMENT DATED MAY 1, 1997
TO THE
PROSPECTUS DATED JANUARY 2, 1991
PRIME PLAN VI
SUPPLEMENT DATED MAY 1, 1997
TO THE
PROSPECTUSES DATED APRIL 30, 1991
PRIME PLAN 7
PRIME PLAN INVESTOR
This supplement describes certain changes to the
investment divisions available for the allocation of premiums or investment
base under the flexible premium variable life insurance contracts noted above
(collectively, the "Contracts") issued by Merrill Lynch Life Insurance Company
("Merrill Lynch Life"), effective after the close of business on May 1, 1997.
Please retain this supplement with your Contract prospectus for your reference.
NEW INVESTMENT DIVISIONS
Beginning on May 1, 1997, seven additional investment
divisions of Merrill Lynch Life Variable Life Separate Account II (the
"Separate Account") will be available for allocations of premium payments and
investment base. With the addition of these seven new investment divisions,
there are 38 investment divisions of the Separate Account currently available
under the Contracts. A Contract owner may select up to five of these 38
investment divisions for allocation of premium payments and investment base.
Of the seven additional investment divisions, two
invest exclusively in Class A shares of designated mutual fund portfolios of
the Merrill Lynch Variable Series Funds, Inc. (the "Variable Series Funds"),
two invest exclusively in shares of designated mutual fund portfolios of the
AIM Variable Insurance Funds, Inc. (the "AIM V.I. Funds"), one invests
exclusively in shares of a designated mutual fund portfolio of the Alliance
Variable Products Series Fund, Inc. (the "Alliance Fund"), and two invest
exclusively in shares of designated mutual fund portfolios of the MFS Variable
Insurance Trust (the "MFS Trust"). Each of these portfolios is discussed in
more detail below.
THE VARIABLE SERIES FUNDS. The Variable Series
Funds is registered with the Securities and Exchange Commission as an open-end
management investment company and its investment adviser is Merrill Lynch Asset
Management, L.P. ("MLAM"). An additional two of its mutual fund portfolios are
currently available through the Separate Account. The investment objectives of
these two newly available portfolios are described below. There is no
guarantee that any portfolio will be able to meet its investment objective.
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Global Bond Focus Fund seeks to provide high total investment return by
investing in a global portfolio of fixed income securities denominated in
various currencies, including multinational currency units. The Fund will
invest in fixed income securities that have a credit rating of A or better by
Standard & Poor's or by Moody's or commercial paper rated A-1 by Standard &
Poor's or Prime-1 by Moody's or obligations that MLAM has determined to be of
similar creditworthiness.
Index 500 Fund seeks to provide investment results that, before expenses,
correspond to the aggregate price and yield performance of the Standard &
Poor's 500 Composite Stock Price Index.
MLAM is indirectly owned and controlled by Merrill Lynch & Co., Inc. and is a
registered adviser under the Investment Advisers Act of 1940. The Variable
Series Funds, as part of its operating expenses, pays an investment advisory
fee to MLAM. (See "Charges to Variable Series Funds Assets" below.)
MLAM has entered into an agreement with Merrill Lynch Insurance Group, Inc.
("MLIG"), Merrill Lynch Life's parent, with respect to administration services
for the Merrill Lynch Series Fund, Inc. (the "Series Fund") and the Variable
Series Funds in connection with the Contracts and other variable life and
variable annuity contracts issued by Merrill Lynch Life. Under this agreement,
MLAM pays compensation to MLIG in an amount equal to a portion of the annual
gross investment advisory fees paid by the Series Fund and the Variable Series
Funds to MLAM attributable to variable contracts issued by Merrill Lynch Life.
THE AIM V.I. FUNDS. The AIM V.I. Funds is
registered with the Securities and Exchange Commission as an open-end, series,
management investment company and its investment adviser is A I M Advisors,
Inc. ("AIM"). Two of its mutual fund portfolios are currently available
through the Separate Account. The investment objectives of the two available
AIM V.I. Funds portfolios are described below. There is no guarantee that any
portfolio will be able to meet its investment objective.
AIM V.I. Capital Appreciation Fund seeks to provide capital appreciation
through investments in common stocks, with emphasis on medium-sized and smaller
emerging growth companies. The portfolio is primarily comprised of securities
of two basic categories of companies: (1) "core" companies, which AIM
considers to have experienced above-average and consistent long-term growth in
earnings and to have excellent prospects for outstanding future growth, and (2)
"earnings acceleration" companies which AIM believes are currently enjoying a
dramatic increase in profits.
AIM V.I. Value Fund seeks to achieve long-term growth of capital by investing
primarily in equity securities judged by AIM to be undervalued relative to the
current or projected earnings of the companies issuing the securities, or
relative to current market values of assets owned by the companies issuing the
securities or relative to the equity markets generally. Income is a secondary
objective. The investment division investing in this Fund should not be
selected by Contract owners who seek income as their primary investment
objective.
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AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, is a wholly owned
subsidiary of A I M Management Group Inc., an indirect subsidiary of AMVESCO
plc (formerly INVESCO plc). AIM is a registered adviser under the Investment
Advisers Act of 1940. AIM was organized in 1976, and, together with its
domestic subsidiaries, manages or advises 48 investment company portfolios
(including the AIM V.I. Funds). The AIM V.I. Funds, as part of its operating
expenses, pays an investment advisory fee to AIM. (See "Charges to AIM V.I.
Funds Assets" below.)
AIM V.I. Funds has entered into an Administrative Services Agreement with AIM,
pursuant to which AIM has agreed to provide certain accounting and other
administrative services to the AIM V.I. Funds, including the services of a
principal financial officer and related staff. As compensation to AIM for its
services under the Administrative Services Agreement, the AIM V.I. Funds
reimburse AIM for expenses incurred by AIM or its affiliates in connection with
such services. AIM has entered into an agreement with Merrill Lynch Life with
respect to administrative services for the AIM V.I. Funds in connection with
the Contracts. Under this agreement, AIM pays compensation to Merrill Lynch
Life in an amount equal to a percentage of the average net assets of the AIM
V.I. Funds attributable to the Contracts.
THE ALLIANCE FUND. The Alliance Fund is registered
with the Securities and Exchange Commission as an open-end management
investment company and its investment adviser is Alliance Capital Management
L.P. ("Alliance"). One of its mutual fund portfolios is currently available
through the Separate Account. The investment objective of the available
Alliance Fund portfolio is described below. There is no guarantee that this
portfolio will be able to meet its investment objective.
Premier Growth Portfolio seeks growth of capital by pursuing aggressive
investment policies. Since investments will be made based upon their potential
for capital appreciation, current income will be incidental to the objective of
capital growth. Because of the market risks inherent in any investment, the
selection of securities on the basis of their appreciation possibilities cannot
ensure against possible loss in value.
Alliance, a Delaware limited partnership with principal offices at 1345 Avenue
of the Americas, New York, New York 10105, is a registered adviser under the
Investment Advisers Act of 1940. Alliance Capital Management Corporation
("ACMC"), the sole general partner of Alliance, is an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the United States, which
is in turn a wholly-owned subsidiary of the Equitable Companies Incorporated, a
holding company which is controlled by AXA, a French insurance holding company.
The Alliance Fund, as part of its operating expenses, pays an investment
advisory fee to Alliance. (See "Charges to Alliance Fund Assets" below.)
Alliance Fund Distributors, Inc. ("AFD"), an affiliate of Alliance, has entered
into an agreement with Merrill Lynch Life with respect to administrative
services for the Alliance Fund in connection with the Contracts. Under this
agreement, AFD pays compensation to Merrill Lynch Life in an amount equal to a
percentage of the average net assets of the Alliance Fund attributable to the
Contracts.
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THE MFS TRUST. The MFS Trust is registered with the
Securities and Exchange Commission as an open-end management investment company
and its investment adviser is Massachusetts Financial Services Company ("MFS").
Two of its mutual fund portfolios are currently available through the Separate
Account. The investment objectives of the available MFS Trust portfolios are
described below. There is no guarantee that any portfolio will be able to meet
its investment objective.
MFS Emerging Growth Series seeks to provide long-term growth of capital by
investing primarily (i.e., at least 80% of its assets under normal
circumstances) in common stocks of emerging growth companies. Emerging growth
companies include companies that MFS believes are early in their life cycle but
which have the potential to become major enterprises. Dividend and interest
income from portfolio securities, if any, is incidental to the Series'
objective of long-term growth of capital.
MFS Research Series seeks to provide long-term growth of capital and future
income. The portfolio securities of the MFS Research Series are selected by a
committee of investment research analysts. This committee includes investment
analysts employed not only by the Adviser but also by MFS International (U.K.)
Limited, a wholly-owned subsidiary of MFS. The Series' assets are allocated
among industries by the analysts acting together as a group. Individual
analysts are then responsible for selecting what they view as the securities
best suited to meet the Series' investment objective within their assigned
industry responsibility.
MFS, a Delaware corporation, 500 Boylston Street, Boston, Massachusetts 02116,
is a subsidiary of Sun Life of Canada (U.S.), which, in turn, is a wholly-owned
subsidiary of Sun Life Assurance Company of Canada, and is a registered adviser
under the Investment Advisers Act of 1940. MFS is America's oldest mutual fund
organization. MFS and its predecessor organizations have a history of money
management dating from 1924 and the founding of the first mutual fund in the
United States, Massachusetts Investors Trust. The MFS Trust, as part of its
operating expenses, pays an investment advisory fee to MFS. (See "Charges to
MFS Trust Assets" below.)
MFS has entered into an agreement with MLIG with respect to administrative
services for the MFS Trust in connection with the Contracts and certain
contracts issued by ML Life Insurance Company of New York. Under this
agreement, MFS pays compensation to MLIG in an amount equal to a percentage of
the average net assets of the MFS Trust attributable to such contracts.
RISKS
Because investment in the portfolios discussed below
entails relatively greater risk of loss of income or principal, it may not be
appropriate to allocate all payments and investment base to an investment
division that invests in one of these portfolios.
RISKS ASSOCIATED WITH THE AIM V.I. CAPITAL
APPRECIATION FUND. In selecting investments for the AIM V.I. Capital
Appreciation Fund, AIM is particularly interested in companies that are likely
to benefit from new or innovative products, services or processes that
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should enhance such companies' prospects for future growth in earnings. As a
result of this policy, the market prices of many of the securities purchased
and held by this Fund may fluctuate widely. Any income received from
securities held by the Fund will be incidental, and a Contract owner should not
consider a purchase of shares of the Fund as equivalent to a complete
investment program.
RISKS ASSOCIATED WITH THE MFS EMERGING GROWTH SERIES.
For the MFS Emerging Growth Series, the nature of investing in emerging growth
companies involves greater risk than is customarily associated with investments
in more established companies. Emerging growth companies often have limited
product lines, markets or financial resources, and they may be dependent on
one-person management. In addition, there may be less research available on
many promising small and medium sized emerging growth companies, making it more
difficult to find and analyze these companies. The securities of emerging
growth companies may have limited marketability and may be subject to abrupt or
erratic market movements than securities of larger, more established growth
companies or the market averages in general. Shares of the MFS Emerging Growth
Series, therefore, are subject to greater fluctuation in value than shares of a
conservative equity fund or of a growth fund which invests entirely in proven
growth stocks.
EXPENSES
CHARGES TO VARIABLE SERIES FUNDS ASSETS. The
Variable Series Funds incurs operating expenses and pay a monthly advisory fee
to MLAM. As the investment adviser, MLAM receives from the Global Bond Focus
Fund and the Index 500 Fund an advisory fee at an annual rate of 0.60% and
0.30%, respectively, of each Fund's average daily net assets. MLAM and Merrill
Lynch Life Agency, Inc. have entered into two agreements which limit the
operating expenses paid by each Fund in a given year to 1.25% of its average
daily net assets. These reimbursement agreements provide that any expenses in
excess of 1.25% of average daily net assets will be reimbursed to the Fund by
MLAM which, in turn, will be reimbursed by Merrill Lynch Life Agency, Inc.
CHARGES TO AIM V.I. FUNDS ASSETS. The AIM V.I. Funds
incurs operating expenses and pay a monthly advisory fee to AIM, which serves
as the investment adviser to each Fund of the AIM V.I. Funds. As the
investment adviser, AIM receives from the AIM V.I. Capital Appreciation Fund
and the AIM V.I. Value Fund an advisory fee at an annual rate of 0.65% of each
Fund's average daily net assets.
CHARGES TO ALLIANCE FUND ASSETS. The Alliance Fund
incurs operating expenses and pays a monthly advisory fee to Alliance, which
serves as the investment adviser to each Fund of the Alliance Fund. As the
investment adviser, Alliance receives from the Alliance Premier Growth
Portfolio an advisory fee at an annual rate of 1.00% of the Fund's average
daily net assets. Alliance voluntarily waives fees and expenses that exceed
0.95% of the average net assets of the Alliance Fund. Alliance may discontinue
or reduce any waivers or assumptions of expenses at any time without notice.
Alliance, however, intends to continue such reimbursements for the foreseeable
future.
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CHARGES TO MFS TRUST ASSETS. The MFS Trust incurs
operating expenses and pays a monthly advisory fee to MFS, which serves as the
investment adviser to each of the Funds of MFS Trust. As the investment
adviser, MFS receives from the MFS Emerging Growth Series and MFS Research
Series an advisory fee, computed and paid monthly, at an annual rate of 0.75%
of the average daily net assets of the respective Fund. Subject to termination
or revision at the sole discretion of MFS, MFS has agreed to bear expenses of
the MFS Emerging Growth Series and the MFS Research Series (the "Series") such
that each Series' expenses except for management fees ("Other Expenses") do not
exceed 0.25% of the average daily net assets of the Series. The obligation of
MFS to bear Other Expenses for a Series terminates on the last day of the
Series' fiscal year in which Other Expenses are less than or equal to 0.25%.
* * *
Please contact your Financial Consultant, or the
Variable Life Service Center at (800) 354-5333, if you would like to receive
illustrations of Contract values that reflect the allocation of investment base
among the investment divisions available under the Contracts after the close of
business on May 1, 1997.
If you have any questions about these changes, please
contact your Financial Consultant or call the Variable Life Service Center.
For your reference, copies of the current prospectuses for the Variable Series
Funds, the AIM V.I. Funds, the Alliance Fund, and the MFS Trust are enclosed.
