Rule 497(e)
File No. 333-03963
ACACIA NATIONAL LIFE INSURANCE COMPANY
ACACIA NATIONAL VARIABLE ANNUITY SEPARATE ACCOUNT II
Supplement Dated September 23, 1998
To the Prospectus Dated May 1, 1998
For the Allocator 2000 Annuity
Offered by Acacia National Life Insurance Company (a Virginia Stock Company)
1. The following paragraph should be read in conjunction with the Allocator
2000 Annuity prospectus:
Acacia Mutual Holding Company, ANLIC's ultimate parent company, and
Ameritas Mutual Insurance Holding Company, a Nebraska domiciled mutual insurance
holding company, have announced their intention to merge on or after January 1,
1999, to form Ameritas Acacia Mutual Holding Company. The Boards of Directors of
both companies approved the proposed merger on September 14, 1998, subject to
regulatory approvals and a favorable member vote. If the merger is consummated,
ANLIC will remain as the depositor for the Variable Account and will continue to
offer its variable insurance products. In addition, Acacia Life Insurance
Company will maintain ownership of all of the outstanding shares of ANLIC. All
Allocator 2000 Annuity policies will remain outstanding in accordance with their
terms. Information concerning Ameritas Acacia Mutual Holding Company will be
sent to Allocator 2000 Annuity policyowners shortly after the merger is
effective.
2. This Supplement deletes the second and third paragraphs under "Charges
Associated With The Policy" located within the section titled "Summary" on page
3 and replaces it with the following:
ADMINISTRATIVE EXPENSE CHARGE - A monthly charge at an effective annual rate of
.10% of your average daily subaccount value will be deducted from your Variable
Account Value on each monthly Policy Anniversary by canceling accumulation units
to partially compensate ANLIC for the costs of administering the Variable
Account and the Policies. (See "Charges and Deductions - Administrative Expense
Charge.")
MORTALITY AND EXPENSE RISK CHARGE - A monthly charge at an effective annual rate
of 1.25% of your average daily subaccount value will be deducted from your
Variable Account Value on each monthly Policy Anniversary by canceling
accumulation units to compensate ANLIC for assuming certain mortality and
expense risks incurred in connection with the Policy. (See "Charges and
Deductions Mortality and Expense Risk Charge.") There is no Mortality and
Expense Risk Charge for amounts in the Fixed Account.
<PAGE>
3. This Supplement deletes the contents of "Example" located within "Portfolio
Annual Expenses" in the section titled "Summary" on pages 6 - 7 and replaces it
with the following:
If you surrender or annuitize your Policy at the end of the applicable time
period, you would pay the following expenses on a $1,000 investment, assuming 5%
annual return on assets:
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Alger American Growth Portfolio $104 $152 $161 $257
Alger American MidCap Growth Portfolio $104 $154 $163 $262
Alger American Small Capitalization Portfolio $104 $154 $166 $267
Calvert Variable Series, Inc. Calvert Social
Money Market Portfolio $102 $148 $156 $248
Calvert Variable Series, Inc. Calvert Social
Small Cap Growth Portfolio $107 $163 $181 $297
Calvert Variable Series, Inc. Calvert Social
Mid Cap Growth Portfolio $106 $158 $173 $283
Calvert Variable Series, Inc. Calvert
Social International Equity Portfolio $111 $173 $198 $331
Calvert Variable Series, Inc. Calvert Social
Balanced Portfolio $103 $151 $162 $259
Dreyfus Stock Index Fund $98 $135 $135 $205
Neuberger & Berman Advisers Management Trust
Limited Maturity Bond Portfolio $103 $150 $160 $255
Neuberger & Berman Advisers Management Trust
Growth Portfolio $104 $154 $166 $268
Oppenheimer Aggressive Growth Fund $102 $149 $158 $251
Oppenheimer Growth Fund $103 $149 $159 $253
Oppenheimer Growth & Income Fund $103 $152 $163 $261
Oppenheimer High Income Fund $103 $152 $162 $260
Oppenheimer Strategic Bond Fund $103 $152 $163 $261
Strong International Stock Fund II $110 $172 $196 $326
Strong Discovery Fund II $107 $162 $180 $295
Van Eck Worldwide Hard Assets Fund $107 $162 $179 $294
If you do not surrender or annuitize your Policy, you would pay the following
expenses on a $1,000 investment, assuming 5% annual return on assets:
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Alger American Growth Portfolio $24 $72 $121 $257
Alger American MidCap Growth Portfolio $24 $74 $123 $262
Alger American Small Capitalization Portfolio $24 $74 $126 $267
Calvert Variable Series, Inc. Calvert Social
Money Market Portfolio $22 $68 $116 $248
Calvert Variable Series, Inc. Calvert Social
Small Cap Growth Portfolio $27 $83 $141 $297
<PAGE>
Calvert Variable Series, Inc. Calvert Social
Mid Cap Growth Portfolio $26 $78 $133 $283
Calvert Variable Series, Inc. Calvert
Social International Equity Portfolio $31 $93 $158 $331
Calvert Variable Series, Inc. Calvert Social
Balanced Portfolio $23 $71 $122 $259
Dreyfus Stock Index Fund $18 $55 $95 $205
Neuberger & Berman Advisers Management Trust
Limited Maturity Bond Portfolio $23 $70 $120 $255
Neuberger & Berman Advisers Management Trust
Growth Portfolio $24 $74 $126 $268
Oppenheimer Aggressive Growth Fund $22 $69 $118 $251
Oppenheimer Growth Fund $23 $69 $119 $253
Oppenheimer Growth & Income Fund $23 $72 $123 $261
Oppenheimer High Income Fund $23 $72 $122 $260
Oppenheimer Strategic Bond Fund $23 $72 $123 $261
Strong International Stock Fund II $30 $92 $156 $326
Strong Discovery Fund II $28 $82 $140 $295
Van Eck Worldwide Hard Assets Fund $25 $82 $139 $294
</TABLE>
In addition, ANLIC will deduct a charge for premium taxes when they are
incurred.
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
EXPENSES AND THE ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN. The
examples are based on an anticipated average initial Premium Payment of
approximately $25,000 and a pro rata portion of the Annual Policy Fee of $42.
4. This Supplement deletes the contents of "Free Look Period" located within
the section titled "The Policy" on page 16 and replaces it with the following:
If for any reason you are not satisfied with the Policy, you may return it to us
within 10 days after you receive it. If you cancel the Policy within this 10-day
Free Look Period, we will refund the Policy Account Value at the end of the
Valuation Period during which the Policy was received by us or, where required
by state law, we will refund the Premium Payments that were paid. The Policy
will be void from the Policy Date. (See "The Policy - Allocation of Premium
Payments.") To cancel the Policy, you must mail or deliver it to either our
Service Office or the registered agent who sold it to you within 10 days after
you receive it. The Free Look Period may be longer or otherwise vary where
required by state law.
Certain states require us to refund the greater of Premium Payments made or the
Policy Account Value at the end of the Free Look Period. Under Policies issued
in these states, we allocate the initial Premium Payment and any additional
Premium Payments received during the Free Look period in their entirety to the
Money Market Sub-account until the end of the Free Look Period. For
administrative reasons, the Free Look Period is assumed to be fifteen days for
this purpose. In all other states, including those which require us to refund
Premium Payments at the end of the Free Look Period, we allocate the initial
Premium Payment and any additional Premium Payments received during the Free
Look Period according to the Owner' initial allocation instructions.
<PAGE>
5. This Supplement deletes the contents of "Administrative Expense Charge"
located within the section titled "Charges and Deductions" on page 21 and
replaces it with the following:
We deduct a monthly charge from your Variable Account Value at an effective
annual rate of .10% of your average daily subaccount value to partially
compensate us for expenses incurred in administering the Variable Account and
the Policy. These expenses include costs of maintaining records, processing
Death Benefit claims, surrenders, transfers and Policy charges, providing
reports to Owners, and overhead costs. This charge is guaranteed not to increase
during the life of the Policy.
6. This Supplement deletes the contents of "Mortality and Expense Risk Charge"
located within the section titled "Charges and Deductions" on page 21 and
replaces it with the following:
We deduct a monthly charge from your Variable Account Value at an effective
annual rate of 1.25% of your average daily subaccount value to compensate us for
assuming certain mortality and expense risks under the Policy. The Mortality and
Expense Risk Charge will be deducted on each monthly Policy Anniversary by
canceling accumulation units and will not be increased during the life of the
Policy. Moreover, the Mortality and Expense Risk Charge is guaranteed to
decrease by .05% on each Policy Anniversary beginning in year 16 until it
reaches an effective annual rate of .50% at the end of year 30. We may realize a
profit from this charge. We will continue to deduct this charge after the
Maturity Date. There is no Mortality and Expense Risk Charge for amounts in the
Fixed Account.
